Here are four compliance issues advisors should consider before taking the leap:

1) Use caution with client details: Brokers risk regulatory violations when they take client information from their old brokerage to their new dually-registered firm. In many situations, the new advisory firm is not a signatory to an industry-wide agreement in which firms agree not to sue one another as long as brokers take only basic information, such as a client's name and email address, said Tom Lewis, a lawyer at Stevens & Lee in Princeton, New Jersey.

In that case, advisors who take just a list of clients' names can trigger SEC and FINRA investigations for violating privacy regulations. It's a "hot-button issue" leading to fines and suspensions for some advisors, Lewis said. Advisors can avoid the problem by having their new firms enter the industry-wide agreement just as the advisors leave their former firms. The agreement is available through the Securities Industry and Financial Markets Association, a Wall Street trade group.

2) Square away disclosures: Clients need to know which type of advisor they are dealing with and when, said Nicholas Olesen, a partner at The Philadelphia Group, a financial advisory firm in King of Prussia, Pennsylvania.

Olesen tells new clients at the onset that he can provide services either through the registered investment advisory arm of his practice, or the brokerage arm. His firm, affiliated with LPL Financial, a unit of LPL Financial Holdings Inc, has separate agreements for the two divisions outlining the different responsibilities, fees, and potential conflicts of interest, Olesen said.

Clients review the fees and disclosures every year and sign new agreements, Olesen said. Some advisors also verbally remind clients of their two hats, depending on the situation.

3) Give clients a fair deal: Flat fees for advice that some clients may pay at an advisor's new business are higher than the total commissions they paid for trades in a brokerage account at the advisor's former firm. That is especially true for clients who do not trade regularly. SEC and FINRA officials have both voiced concerns about the practice, known as "reverse churning."

Advisors whose clients move with them to the new business have to calculate which model costs less and disclose that to the client, said Joel Beck, a lawyer in Lawrenceville, Ga., who advises brokers. "Clients may still be OK with the extra fee when the understand the difference between the two types of accounts. But they can make an informed decision," Beck said.

4) Get help: Brokers who launch an independent firm without help from a compliance professional may run into trouble when regulators uncover problems down the road. They may not realize, for example, that policies they must follow for the brokerage with which they affiliated, such as LPL Financial or Raymond James Financial Inc, do not extend to the advisory arm that the SEC oversees.

Consultants charge anywhere from $3,000 to more than $10,000 to set up a registered investment advisor, depending on factors such as the number of advisors and business model. Services typically include filing a mandatory SEC disclosure form to developing a compliance manual and documents. The bill may be tough to stomach, but cleaning up a regulatory violation could cost even more, say lawyers.

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