Client consent and data on a transfer of business
Client data goes to a buyer in stages, and what the clients are told and asked to agree to depends on how the transfer is made.
Client data goes to a buyer in stages, and what the clients are told and asked to agree to depends on how the transfer is made.
An advice firm holds detailed personal and financial information about every client. When the firm is sold or its clients move to another firm, that information moves too. Data protection law and the client agreement both govern how it moves, and getting the order wrong can put the deal and the clients' trust at risk.
Take data protection advice on your own transfer.
A buyer needs to understand your clients before agreeing a price, and can do so without knowing who they are. Share client information in a form that does not identify individuals: ages, fee levels, product types, review dates and assets, with names, addresses and contact details removed.
Where a buyer needs to look at sample files, agree the terms in writing first: a confidentiality agreement, limits on who sees the files, and a commitment to delete or return them if the deal does not proceed. Keep a record of what was shared, with whom, and on what basis.
When the transfer happens, the firm responsible for the client data changes. Clients must be told who now holds their information, what it is used for, and how to contact the new firm about it. That is normally done with a letter and an updated privacy notice.
How client consent is handled depends on the type of transfer. In a sale of the company, the company stays the same and the client agreement continues. In a transfer of the business to another firm, the client agreement may need to be assigned or replaced, and the client may need to agree. In a novation, each client agrees to the new firm taking over. Read your client agreement for what it says about transfer, and take advice on which route your deal uses.
Platforms and providers have their own requirements. Some will move clients to a new firm's agency on a bulk instruction supported by the sale agreement. Others need a signed authority from each client. Ask each one early. A list of providers that need individual signatures tells you how much client contact the transfer will need.
Where a transfer needs the client's agreement, some clients will not give it, and some will not reply. Decide in advance what happens to each group. A client who declines may want to move to another adviser of their choice, and will need their file and help with the provider paperwork. A client who does not reply needs further contact, by phone and in person, before any decision is made about their account.
Moving client data creates risk. Files sent by email, spreadsheets saved to personal devices, and access left open on systems that are being closed are all routes by which data can be lost or seen by the wrong person. Agree how data will be moved, who will move it, and when access to the old systems will be closed. Keep a record of each step.
Regulatory rules require advice records to be kept for set periods, and some, such as records of pension transfer advice, must be kept indefinitely. Agree in writing who keeps which records after the transfer, and how you can get access to them if a complaint arrives about advice you gave. Data protection law requires that personal data is not kept longer than needed, so the agreement should also say when records will be deleted.
Files contain information clients shared in confidence: health conditions, family circumstances, details of vulnerability. That information moves with the file, and it is also among the most valuable things the new adviser can have. Record it accurately and check that the client knows it is held.
When you join Securo, systems and data move to Equity & General’s infrastructure, and you continue to advise your clients. The data moves at that point, before any sale, and the clients are told which firm holds their information. Ask how that notice is worded and when it is sent before you join, and make sure your own client agreements are reviewed as part of the process.
Most of the preparation for an exit can be done before your staff, your clients or a buyer know you are thinking about it.
Read it
If you could not work from tomorrow, your clients, your staff and your family would need a plan that exists already.
Read it
A principal who wants to keep advising part time needs the work arranged around the days they are in. Under Securo the back office runs on the other days.
Read itSteven Bates, Director of Advisory at Equity & General, takes the first call with every adviser. Ring him on 020 8396 0486 or send a short note about your firm.