What are the steps in switching broker-dealers?
A move has a long preparation phase and a short execution phase. Before resigning, the advisor typically negotiates with the new firm, reviews their employment or affiliation agreement, any promissory notes and deferred compensation at the old firm, and decides what client information they may lawfully take. The new firm prepares the advisor's Form U4, branch office registration if needed, and account paperwork for clients.
On the day of the move, the advisor resigns in writing, the new firm files the U4, and the advisor begins contacting clients as their contracts and the Broker Protocol allow. Clients who decide to move sign new account forms and transfer instructions, and the new firm submits the transfers through ACATS. The old firm files the U5 within 30 days. In the weeks that follow, the new firm completes background verification and fingerprints, while the advisor follows up on accounts and holdings that didn't transfer automatically.
Every firm and contract is different, and the details below describe the regulatory framework, not any firm's process. This guide is general information, not legal, tax or career advice; advisors planning a move should consider getting their own legal advice before they resign.
How does registration move: Form U4, Form U5 and relicensing?
Form U4, the Uniform Application for Securities Industry Registration or Transfer, is how a broker-dealer registers an individual with FINRA, other self-regulatory organizations and the states. When the advisor already holds registrations, the new firm can file it as a relicensing request, a filing type FINRA's Web CRD guidance describes for individuals currently registered with another firm, or registered with one within the last 30 days, who are simply changing firms. According to that guidance, some jurisdictions approve a relicensing request immediately, while others grant a temporary 30-day registration so the individual can keep working while it is reviewed; the advisor signs a temporary registration acknowledgment on the form. The approach dates to FINRA's predecessor's Temporary Agent Transfer program, which took effect July 2, 1984.
The old firm files Form U5, the Uniform Termination Notice for Securities Industry Registration. FINRA's By-Laws require it within 30 days of terminating the registration, along with a copy to the individual, and the U5 records why the person left and answers disclosure questions that can appear on BrokerCheck. Our guide to Form U5 covers termination reasons and disputes.
Timing matters if there's a gap. FINRA generally requires individuals to requalify by examination if they aren't re-registered within two years after a registration ends, though its Maintaining Qualifications Program lets eligible people extend that to five years by completing annual continuing education.
What does the new firm have to check?
FINRA Rule 3110(e), effective July 1, 2015, requires firms to have written procedures to verify the accuracy and completeness of the information on an applicant's Form U4 no later than 30 calendar days after filing it. At a minimum, verification must include a national search of reasonably available public records, according to FINRA Regulatory Notice 15-05, which lists criminal records, bankruptcies, judgments and liens among the categories.
Fingerprints are a separate clock. Under FINRA Rule 1010(d), a firm must promptly submit fingerprints when it files a U4, and FINRA may make the registration effective while they are pending. If the firm doesn't submit them within 30 days after FINRA receives the U4, the registration is deemed inactive, and the person must stop any activity that requires registration until it is restored.
After the move, the advisor and the firm share a continuing duty to keep the U4 current: FINRA says amendments are due no later than 30 days after learning of the facts that require them.
What client information can an advisor take, and how are clients told?
If both the old and new firms are members of the Protocol for Broker Recruiting, the departing broker may take only each client's name, address, phone number, email address and account title, must resign in writing to local branch management, and must give the branch a copy of the client information being taken. The Protocol was created in 2004 by Citigroup Smith Barney, Merrill Lynch and UBS; Morgan Stanley withdrew in November 2017 and UBS in December 2017.
Outside the Protocol, the advisor's employment agreement and state law govern. WealthManagement.com has reported that employment contracts often include non-solicitation clauses lasting from six months to several years, and that garden leave provisions can bar advisors from telling clients they're leaving. A firm that believes a departing advisor is improperly soliciting clients can seek a temporary restraining order in court, and FINRA Rule 13804 requires it to file for permanent relief in arbitration at the same time.
The new firm has its own notice duty. Under FINRA Rule 2273, in effect since Nov. 11, 2016, a firm that hires a representative must give the representative's former retail customers a FINRA-prepared educational communication when it or the representative contacts them about moving assets, or with the transfer paperwork if they move without being contacted. The obligation lasts three months after the representative joins. If the first contact is oral, the communication must follow within three business days or with other transfer documents, whichever comes first.
How do client accounts move, and how long does it take?
Each client who decides to move signs account forms at the new firm and a transfer instruction, and the new firm submits the transfer through ACATS, the National Securities Clearing Corp.'s automated transfer system. Under FINRA Rule 11870, the old firm must validate or take exception to the request within one business day and complete the transfer within three business days after validation. Since NSCC dropped a settlement-preparation day on Oct. 17, 2025, full transfers have taken about three to four business days, as reported.
Not everything moves automatically. Proprietary products of the old firm are nontransferable unless the new firm agrees to accept them, and the customer must be asked in writing whether to sell them, leave them or transfer them in their own name. Annuities and some alternative investments may require separate processing. Our guide to ACATS and repapering covers the details.
Some clients will stay behind. Cerulli Associates estimated in July 2025 that advisors moving between broker-dealers typically lose about 22% of their assets.
What is in a transition package?
Firms recruiting experienced advisors usually pay for the move, most often with a forgivable loan documented in a promissory note and forgiven in installments while the advisor stays. Financial Planning reported in May 2026 that independent broker-dealers paid about 125% of prior-year revenue on average, up from a historical standard of 100%, while wirehouse offers ranged from 300% to 400% of trailing-12-month revenue. The same report said LPL Financial carried about $3.68 billion of such loans at the end of 2025.
Packages can also include back-end bonuses tied to asset or revenue targets, and transition help with staff, technology and paperwork. The other side of the ledger matters as much: an advisor leaving a firm typically forfeits unvested deferred compensation, and any unforgiven balance on a recruiting loan from the old firm generally comes due. Firms pursue unpaid notes in FINRA arbitration under Rule 13807. Each forgiven slice of a new loan is generally taxed as ordinary income in the year it is forgiven; this is not tax advice.
What else should advisors plan for?
Outside business activities need approval again at the new firm. Advisors with insurance agencies, an independent RIA or other businesses must disclose them, and the rules are changing: the SEC approved FINRA Rule 3290 on Sept. 15, 2026, to replace FINRA's outside business activity and private securities transaction rules, Rules 3270 and 3280. As of October 2026, FINRA had not announced an effective date.
Office logistics follow from the new firm's structure. An independent advisor's office is usually registered as a branch of the new broker-dealer on Form BR and supervised through an office of supervisory jurisdiction, which may be run by the advisor, by a larger affiliated firm or by the broker-dealer itself.
Finally, the U5 itself deserves attention. The old firm chooses the termination reason and answers the disclosure questions, and that information can appear on BrokerCheck. An advisor who believes a U5 is inaccurate or defamatory can challenge it in FINRA arbitration.