How bank advisors can switch firms without lawsuits

Bank-based financial advisors should add a personal phone number and email to resignation letters so their former employers must provide clients a way to reach them, lawyers say. The advice follows a string of lawsuits by JPMorgan alleging that departing branch advisors solicited clients after leaving.

FINRA guidance requires firms to give clients contact information when a client asks how to reach a departed advisor. Scott Matasar, co-founder of MatasarJacobs in Cleveland, recommends including a cell number and personal email in resignation notices to remove any excuse for withholding the details. “They don’t have to volunteer it,” Matasar noted. “But if the customer flat out asks, ‘Where’s my old one? How can I get a hold of him?’ They’re obligated to hand that out now.”

JPMorgan has filed federal suits naming former advisors Ali Asgher in New Jersey and Cody Rankin and Emilia Penney in Virginia, accusing them of breaching nonsolicitation clauses after resigning and joining competitors. The company says Asgher moved roughly $4.8 million in client assets and three client households after resigning on July 6. Court filings say Asgher previously worked with nearly 470 client households and managed about $300 million at the firm. JPMorgan has sought temporary restraining orders to bar further client outreach while disputes proceed; the firm declined to comment.

Recruiters and lawyers describe higher litigation risk for advisors who worked from bank branches because many of those clients began as bank customers. Phil Waxelbaum, founder of Masada Consulting, pointed to the distinction between clients an advisor brought with them and clients the bank referred or had an existing relationship with. He noted that failing to list pre-existing client relationships on forms some banks provide is a common error.

The Broker Protocol, a voluntary industry agreement, generally protects advisors who take only basic client contact details when they leave a firm. Some large banks exclude branch advisors from protocol protections and impose stricter confidentiality and solicitation limits. JPMorgan applies the protocol to certain brokerage units but not to its bank-branch advisors, which leaves those advisors subject to tighter rules.

Lawyers recommend several practical steps. Advisors can send short departure notices that simply announce their exit, often called tombstone letters. They should document any pre-existing client relationships in writing well before resigning. Connecting with clients on LinkedIn is an option, though public statements and posts can later be used as evidence in disputes. Some recruiting firms allow a single brief announcement call to former clients; recruiters warn such calls can create disputes because there is no record of what was said.

Legal counsel should be involved early, attorneys say. Matasar advises consulting a lawyer at least 30 days before resigning, with 60 days preferable and 90 days optimal to prepare agreements and retention strategies. Sharron Ash, chief legal counsel at Hamburger Law, observed that suits by large banks can act as a deterrent to other branch advisors considering exits and described outcomes as fact-specific, varying by contract terms, state law and the arbitrator or judge.

Most solicitation disputes settle before reaching FINRA arbitration, lawyers say. Advisors who plan to leave a bank channel are being urged to document communications, plan the resignation wording and consult counsel to reduce the risk of litigation or temporary court orders that limit client contact.