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Stifel CEO Warns Protocol Withdrawals Will Cause More Litigation

February 1, 2018

As its CEO warns of a wave of litigation sparked by Broker Protocol exits, the wealth management unit of Stifel Financial Corp. finished the year with record client assets and net revenues but a slightly shrinking advisor count, FA magazine writes.

During an earnings call Wednesday, Stifel CEO Ron Kruszewski addressed the departure of Morgan Stanley, UBS and other firms from the Protocol for Broker Recruiting, which lets departing reps take some client data with them without fear of legal reprisal. Kruszewski said the move will likely fuel more litigation, according to FA magazine. He also added that while he’s “dismayed” about large companies exiting the protocol, he also believes that “in the end the industry is going to deal with this,” the publication writes.

Stifel’s approach to adding advisors may help keep it out of the courtrooms. Kruszewski told analysts the firm prefers acquiring new firms over nabbing individual reps, according to FA magazine. In October, Stifel announced that it was buying Ziegler & Company’s wealth management business, whose 57 reps oversaw $4.8 billion, the publication writes. Last year, Stifel acquired City Securities Corp., whose 40 advisors managed $4 billion, according to FA magazine. It also bought the U.S. unit of Barclays’ Wealth and Investment Management in 2015, which had 180 reps managing $56 billion, the publication writes.

The company was overseeing $272.6 billion by the end of the year — a 15% increase from the year prior — and net revenue in the fourth quarter reached $474 million — a 16% rise year over year, according to the publication. Nonetheless, the quarter also saw a 1.6% drop in the number of Stifel’s advisors, who numbered 2,244 by the end of 2017, FA magazine writes.

Kruszewski said the company eased up on recruiting in anticipation of the Department of Labor’s fiduciary rule, according to the publication. The rule purports to force retirement account advisors to serve in the clients’ best interests and went into partial effect in June. Kruszewski said recruiting at Stifel has come back up and that he sees a healthy recruiting pipeline, FA magazine writes.

By Alex Padalka
  • To read the FA Magazine article cited in this story, click here.