Departing Brokers Should Brace For Battle: Even When Financial Advisors Follow All the Rules, Jilted Brokerage Firms Wreak Havoc

When a financial advisor wants to move from one brokerage firm to another, there is a specific set of rules that the broker must follow in order to avoid liability to the broker’s former firm. Those rules are set out in the Protocol for Broker Recruiting.

But even when a broker follows those letters to a T, sometimes the brokerage firm the advisor is leaving decides to punish the broker for perceived disloyalty. This approach, which can include scorched-earth tactics, often takes the form of FINRA arbitration and other litigation. While the experience can take a toll, both financial and emotional, it can have a happy ending.

Think Advisor published a fascinating, in-depth article on what happened when John Lindsey, a very successful Edward Jones broker for nearly twenty years, decided to break away. It was not a pretty picture, and it does not reflect well on Edward Jones in particular.

Lindsey, with the help of experienced legal counsel, ultimately prevailed in his fight against Edward Jones. And now he is spreading the word about how he won, in hopes of showing others that they should not feel as if they are “owned” by their employers. It’s an impressive victory and contains important lessons for financial advisors.

From my perspective, the main takeaway for brokers from Lindsey’s experience is this: if you are going to move your business from one brokerage firm to another, it’s not enough to be ethical and honest. You also need to be prepared to fight for your right to work where you choose. And part of that preparation is retaining an attorney who can help defend and enforce that right.

If you are a financial advisor who is considering moving your business from one brokerage firm to another, please contact The Galbraith Law Firm at 212.203.1249 or email a securities attorney at kevin@galbraithlawfirm.com for a free confidential consultation regarding your legal rights.