Broker changing firms? Do due diligence before you follow.

All of the regulators, FINRA, SEC and the states securities commissioners advocate checking out your broker or advisor prior to doing any business or investments with him or her.  However, if your broker or advisor changes firms and calls you up to sign a transfer form to move your account over to the new brokerage firm, you may want to check him or her out prior to doing so.  Although the broker/advisor may give some reasonable reason for changing there could be another reason he or she is not telling.  That reason may be on the broker/advisor’s Form U5, which is the industry’s standard form for recording the termination of a broker from a brokerage firm, but more importantly it states the nature of the termination (i.e., if the termination was not voluntary then the form will state why the broker was terminated and possibly give more details).  A brokerage firm has 30 days to file the Form U5 after the date of termination.  FINRA’s Broker Check may not show terminations for cause (i.e., adverse) for at least another 15 days after filing.  Also through Broker Check is the ability to check out if your broker is also registered as an investment adviser representative (i.e., an advisor that gets paid an asset based fee instead of transactional commissions).  You can also check out investment adviser representatives on the SEC website.  Lastly, you can also request your broker’s complete registration records from your state securities commissioner.  NASAA, the North American Securities Administrators Association, provides a map to help you find your state securities regulator.  So, the bottom line is that just because your broker asks you to move your account with him or her doesn’t mean you have to.  You can stay at the current brokerage and ask to be assigned to another broker, transfer your account to another brokerage firm, or follow your broker.  But, if doing the latter, you should do some due diligence first, to see why he or she is moving.