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Broker Protocol Update: Will Wells Fargo Stay or Go?

By George C. Miller, Esq. of Shustak Reynolds & Partners, P.C. posted on Wednesday, June 27, 2018.

George C. Miller

George C. Miller

Partner

Location: San Diego, California
Phone: (619) 696-9500 (Ext. 105)
Direct: (619) 501-8270
Email[email protected]

An internal memorandum Wells Fargo recently circulated to its 14,000+ advisors has called into question the firm’s ongoing commitment to The Broker Protocol. The memorandum reportedly lists a number of planned updates to the firm’s client privacy policies, including a notice to clients that they may “opt out” from allowing their advisor to take contact information with them in the event they leave the firm. A potential departure from Wells Fargo, which has had its name and reputation sullied following a series of scandals and record-breaking fines, may be fresh on the mind of many firm advisors. The new policy, if adopted, could make it more difficult for those advisors to transition their business and clients to another firm. 

The Broker Protocol is an agreement among numerous broker-dealers and RIAs that allows departing financial advisors to take certain client contact information with them, provided they transition to another Protocol member firm and follow Protocol rules. In the wake of several public deflections from the Protocol by Wells Fargo’s competitors (most notably Morgan Stanley and UBS), and likely as part of an attempt to maintain some degree of good will with its advisor force, Wells Fargo has publicly stated that it remains committed to remaining in the Protocol. But affirmatively telling clients they may “opt out” from having their information shared in the event their advisor leaves where there is no apparent legal or regulatory obligation to do so appears at odds with the firm’s stated intentions. 

The sharing of information in a Protocol transition does intersect with industry privacy regulations, including Regulation S-P and the Gramm-Leach-Bliley Act. Prior guidance suggests, however, that as long as firms and departing advisors follow Protocol rules, there is little risk of a regulatory problem. 

Shustak Reynolds & Partners, P.C.’s California and San Diego FINRA attorneys routinely represent broker-dealers and financial advisors in transitions and related matters. Please contact us today for a confidential, complimentary consultation.

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