FINRA Issues Guidance to Firms and Advisors Related to Customer Communications When Advisors Leave the Firm
Recently, FINRA issued Regulatory Notice 19-10, a welcomed pronouncement for financial advisors leaving their firms.
Customer communications are critically important when advisors leave their firms and transition to a new firm. According to FINRA, an advisor's departure may prompt customer questions about the departure and the status of their accounts.
The Notice reminds firms of their obligations under the communications rule. FINRA states that: "[A] member firm should communicate clearly, and without obfuscation when asked questions by customers about the departing registered representatives…[and] when asked by a customer…[provided the] …phone number, email address or mailing address of the departing representative."
In a nutshell, FINRA expects its members, upon the departure of an advisor, to:
- Promptly and clearly communicate to affected customers how their accounts will continue to be serviced;
- Provide reasonable contact information such as phone number, email address or mailing address, of the departing representative; and
- Provide information about the advisor which is fair, balanced and not misleading.
The Regulatory Notice states that FINRA would not expect a member firm to seek to obtain the departing advisor's contact information if not known by the member firm. Thus, advisors should be certain to include contact information in their resignation letter.
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