3.5.6. Contacting Former Customers After Moving to a New Firm
When a registered rep moves to a new firm, he may want to persuade his former customers to move over to his new firm. Upon contacting these former customers, the rep must give them an educational document that describes the costs and complications of transferring assets to a new firm.
The first time the representative (or anyone else at the representative’s new firm) has individualized contact with a former customer regarding transferring assets to the new firm, the new firm must provide the former customer with the educational communication. This “educational communication” is created by FINRA and designed to clearly explain the issues that could come up if the customer moves to the new firm, such as non-transferable products and account termination fees. The educational communication may be viewed at http://www.finra.org/industry/broker-recruitment-notice. It must be provided to the customer exactly as it appears on FINRA’s website.
Individualized contact includes written, electronic, or oral communication, but excludes communication aimed at the general public, such as a print ad or social media post. If the individualized contact is in writing, a physical copy of the educational communication must be included. If the contact is electronic, the educational communication must be provided as an attached file or by prominently including the above link. If the contact is oral, it must include oral notice that the educational communication will be provided (which must be done within three business days). Even a mention that the representative has moved to the new firm is considered enough of a lead-in to the topic of transferring assets that it triggers the requirement.
If a former customer wishes to transfer her assets without ever having received individualized contact (perhaps after having heard about the representative’s new position through other means, such as word of