Integrity

If you are over 40 you should remember Joe Isuzu. The fast talking, truth bending, lovable, car salesman. Whenever I consult an advisor to a new affiliation one or more Joe Isuzus seem to appear. They take the form of advisors "competing" to retain the departed advisors accounts. They thrive on misleading statements like:

"I have reviewed your portfolio and I don't know what he/she was thinking."

"How did he/she come up with the fees you are being charged ?."

"My performance for clients is waaaay better than this."

"Did he/she tell you these investments were suitable for you?"

"I thought he/she learned better from me."

They respond to questions like this:

"Managment won't tell us why he/she is gone"

"Managment has issues with him/her."

"There was lots of stuff going on there I can't discuss."

"I have no idea where he/she went."

"I am not at liberty to share any contact info."

Are you feeling the Joe Isuzu here? The goal is to create insecurity and doubts about the departed advisors integrity. No material facts and no promises to be held to. The Joes comfort themselves that they are not defaming or even lying. Quality managers and firms see it differently. Unfortunately, there are still firm leaders that turn their heads, rationalize or worse encourage this slimy behavior.

I do a fair amount of "expert witness" work in FINRA arbitrations and courts supporting advisors. Your head would explode if I shared some documented quotes from leaders. I had one not long ago, where we captured email from a senior manager, saying: "I don't give a s--t what FINRA thinks. Well the FINRA panel disagreed and his dumb comment cost his firm roughly $1.2M. Still it happens...

So when you make a change of affiliation you need to know how to defend against the Joe Isuzus out there. Here is my best advice:

There are three critical FINRA standards that can stop the Joes dead in their tracks.

• Rule 2140 that prohibits interfering with the transfer of client accounts to firm/advisor of their choice.
• Advisory 19-10 that details that clients reassigned to an advisor must be made aware they have the right of free will to keep their account at the firm or transfer their account to whomever they prefer. In addition any client that inquires must be provided full contact information for the departed advisor, if the advisor has authorized that information be shared. (Always include that forwarding information in your resignation letter!)
• Rule 2010 that demands all firms and advisors conduct themselves with "High Standards of Commercial Honor" (The "if you lie you die" rule that is broadly applied to cover bad acts not otherwise defined.)

When talking to clients after the move keep great notes. Ask clients how they were solicited by the reassigned advisor. You won't need to probe deeply. Clients are smart they can sniff Joe Isuzu tactics and they will share freely. The question itself is often cathartic.

If you identify questionable behavior make sure your notes of the client contact are shared with your new firm's compliance and legal departments leadership, along with any outside counsel that may have helped with your move. Urge them to please send a "cut it out" letter to your old firm as far up the chain of command they think appropriate. Then keep taking notes of all additional client reports of questionable behaviors. Share with the people in compliance or legal, woking with you, each new set of notes. The goal is to substantiate, if appropriate, a pattern of bad behaviors that may violate FINRA standards outlined above. Typically the nonsense stops dead in its tracks right after the "cut it out" letter. Sometimes, but rarely, the demand needs to be upgraded to a "cease and desist" action. Legal counsel will know when the line is crossed.

One caution that must not be violated! Do not call the Joe Isuzu or Joe Isuzu manager at your former firm! No matter how pissed off you are direct contact can diminish your claim and will never get the desired attention a lawyer can inspire.

Sadly, life is filled with low talent bottom feeders. They can't win on merit so they survive on fast talk, emotional terrorism, misrepresentation and lies. When confronted with these primordial beings be thankful quality firms and FINRA are repulsed and are anxious to make the Joe Isuzus extinct.