Many investors rely on financial advisors to help them reach their financial goals. When an investment advisor or stockbroker leaves their position with a firm, however, their clients may have questions about what may happen with their investment accounts.
The State Corporation Commission Division of Securities and Retail Franchising encourages Virginians to know ahead of time what to expect if their investment advisor or stockbroker leaves their employer. In the event this occurs, investors are encouraged to find out why they left and understand what will happen to their investment account.
Departures may be voluntary such as job changes, retirement or a move to another city. Or they could be involuntary – such as a termination or health issues. In either case, it’s important to know how a financial service professional’s firm will handle their departure, how your account will be serviced, and what information the firm will provide regarding the departing employee. The answers to these questions may vary from firm to firm.
“Don’t be taken by surprise if your investment professional leaves their firm or the financial services industry,” said Director Ron Thomas. “Know in advance what to expect. Ask questions and understand your options before determining what to do with your investment account.”
Some common questions that Virginians may ask include the following:
- Will I be notified if my stockbroker or investment advisor leaves the firm or leaves the financial industry completely? If so, how and when will I be notified?
- How can I find out why they left the firm?
- How will my account be serviced if my stockbroker or investment advisor leaves?
- Will I be assigned a new broker or advisor, or will my account be assigned “to the house” – a general account at the firm without an assigned individual managing the account?
- Will I receive the same services I previously received with my broker or advisor?
Will the firm continue to collect the same fees from me? Keep in mind that broker-dealers and investment advisers have a responsibility to ensure that the services they charge you for are actually provided.
- To whom can I direct questions or trade instructions?
- What are my options regarding my account? For example, should I retain assets at the existing firm, or may I transfer assets to another firm?
- Can I get contact information for my departing broker? Firms may have policies regarding whether a departing stockbroker or investment advisor can communicate with you or solicit you to transfer your account to another firm.
If you work with a specific advisor, broker or team, you should receive notice from their firm if they will no longer be servicing your account. If you receive such a notice, consider following up immediately to find out why. Also ask questions to understand the situation before your account is reassigned or you decide to transfer your account elsewhere.
For additional information, contact the Division at 804-371-9051 or toll-free at 1-800-552-7945 or email [email protected]. The North American Securities Administrators Association provides information about Reassigned Investor Accounts.
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