Advisors should avoid violating privacy regulations during the transition process, says Potter. An advisor's old firm has privacy obligations to clients until they move their assets to another firm, he says. Copying client information, such as account and Social Security numbers, to a flash drive or other storage device before a client authorizes a transfer could mean future trouble with regulators, he says.
Filling in account transfer forms for clients to sign after registering with a new firm is also against the rules, says Potter. "If you think it would be a nice convenience for your customers to fill in the form with their account numbers, you can't," he says.
Employment or independent contractor agreements with a current firm can be another hurdle for advisors. They must often give notice, but those provisions may not apply if a firm is having financial problems. "There are usually 'outs' when firms have financial difficulties because brokers can't serve their customers," he says.
A chance to bond with clients is often a silver lining amid the paperwork and anxiety of a firm's possible closing, says Potter. "There's a lot of client hand holding you can do," he says. "It's a great time for that."
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