Jack, this is really good information. Thanks. Looking inside the sausage factory isn't always pretty!
Re: Good advice
Watchdog
4/27/2012 11:40:22 AM
Five years is the typical time period for earning 100% of the bonus dollars that advisors receive when they change firms.
This is one type of broker, a commission rep who changes broker/dealers with a goal of continuing to be a commission rep.
There are also advisors who leave to start their own Registered Investment Advisory firms - there is no bonus. Or, they register with an independent RIA that is not part of a broker/dealer - again, there is no bonus.
You have to be very, very cautious if you stay with your broker's old firm. If you represent a lot of revenue potential you may be assigned to the broker/dealer's best sales rep. If you represent a small amount of revenue potential you may be assigned to a new sales rep who has no experience.
Re: Good advice
mInvestor
4/26/2012 6:10:19 PM
Thank Jack,
For this valuable article. It explained quite several puzzles I had in the past. No wonder one of my adviser had changed her postion couple of times in the last 10 years. The bonus was probably the key for those moves.
Unfortunately, we investors have to face this kind of decision every 5 years (is that the average frequency?) If we are not happy with the new adviser but decided to stay with old firm, what options do we have?
Re: Good advice
Watchdog
4/25/2012 6:28:30 PM
It is a problem if the broker invested your assets in proprietary mutual funds. There is a good chance the funds are not transferable. It is an even bigger problem if your investments in the funds have taxable gains. Then the move creates taxable events.
Re: protocol
Watchdog
4/25/2012 6:24:42 PM
Re: Good advice
Watchdog
4/25/2012 6:23:51 PM
In the old days they used to duplicate all of their clients' records a few at a time to avoid raising suspicions. More aggressive advisors might come in at midnight and remove client files. Tactics varied because firms had different policies for dealing with brokers who changed firms. Under the Protocol firms are are not going to get restraining orders, but they will fight for the clients. They will want to retain client records, but enterprising brokers will already have copies.
Re: Good advice
Watchdog
4/25/2012 6:18:30 PM
Most brokers start evaluating their clients willingness to move months before they initiate the change. If they run into a lot of resistance they may choose to stay put.
Re: Is the Protocol legal
Watchdog
4/25/2012 6:15:03 PM
I don't think so because investors benefit from the Protocol. They can follow their brokers without any legal hassles that interfere with their move.
Re: Is the Protocol legal
Watchdog
4/25/2012 6:14:58 PM
I don't think so because investors benefit from the Protocol. They can follow their brokers without any legal hassles that interfere with their move.
Re: protocol
Watchdog
4/25/2012 6:12:43 PM
Yes. The big firms figured out it is a zero sum game. A Merrill Lynch broker leaves to go to Morgan Stanley and Merrill takes legal action. A Morgan Stanley broker leaves to go to Merrill Lynch and Morgan Stanley takes legal action. The firms finally figured out they save money by not initiating legal action. Not to mention the potential fallout from the negative publicity. A lot of investors do not like the idea of being owned.
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