EXPERIENCED SECURITIES REGULATORY LAWYERS
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How Are Financial Advisors Preparing For Retirement

How so often have we heard that doctors and nurses make terrible patients? Haven’t lawyers always been told to never represent themselves in legal matters?

How about financial industry professionals? Are they any better in making decisions affecting their personal and professional livelihood?

Apparently, not all of them.

A recent article in the online newspaper InvestmentNews discusses how financial advisors who are going to retire in the next ten years plan the transitioning of their business.

Some plan to transition their client book to a relative or junior partner. Some intend to handoff their book to a colleague or business partner.

However, approximately 44,000 brokers, equal to 37% of the brokers intending to retire in ten years, have no transition plans whatsoever.

What are the options for brokers who have not yet considered their book of business post-retirement? Many firms have a retired broker program in place. For several years now FINRA has permitted retiring brokers to transfer their book to another broker or brokers (the “receiving broker) in the firm who will assume the responsibility for servicing those accounts. The retiring broker and the receiving broker agree to a commission split. The commission split declines during the life of the agreement, which lasts two-three years.

Since this is FINRA we’re talking about, of course, there are procedures to be followed. The agreement between the retiring broker and the receiving broker must be in writing. The retiring broker must agree that he will not contact former clients to conduct any securities business or transactions. The retiring broker must agree to certify in writing that he has not conducted any securities business since retiring.

Also, since this is the securities industry, some practical questions arise. What happens if the receiving broker resigns from the firm to join another broker-dealer before the term of the agreement expires? What happens if some clients decide not to stay with the firm after the retiring broker leaves?

All of the above, points to the fact that any financial advisor contemplating retirement should consult an experienced securities employment attorney before announcing his retirement. The securities employment attorneys at Lubiner, Schmidt & Palumbo can advise you as to how best to maintain, at least for a while, a revenue stream from your long standing accounts. If your firm has a retired broker program, Lubiner, Schmidt & Palumbo can work with your employer in drafting an agreement that will meet your needs as well as the firm’s.

If you are thinking of retiring from the securities industry, you should also be thinking of calling Lubiner, Schmidt & Palumbo.

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