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Since Morgan Stanley and UBS Left Protocol, FAs find it Harder to Jump Ship

June 7, 2018

Following the exit of wirehouses UBS Wealth Management and Morgan Stanley from the Broker Protocol, advisors have been slower to switch firms, InvestmentNews reports. The Broker Protocol is an industry accord that lets advisors leaving brokerages take limited and specified amounts of client data without the fear of facing a lawsuit. And InvestmentNews reports both UBS and Morgan Stanley have seen a decrease in FA recruiting. Across the industry, the number of advisor teams to switch firms decreased by 63 in the first quarter of 2018 in comparison to the last 3 months of 2017.

But Mark Albers, industry recruiter, tells InvestmentNews the recent change in protocol procedures has not stopped FAs from switching firms -- it's merely lessened the number of advisors leaving. The report says Wells Fargo Advisors observed a recruiting decrease of 15% across its wealth management, independent advisor, and bank divisions following the exits of UBS and Morgan Stanley from the protocol. Wells Fargo decreased the rate its advisors are leaving by 25% in the first three months of the year, InvestmentNews reports.

Morgan Stanley’s break from the broker protocol also recently caused issues for FAs fleeing the firm in San Diego. The advisors sued their former employer seeking access to their former clients' information. The advisors sued Morgan Stanley because they say the non-solicitation clause in their contracts is “illegal” and “unconscionable.” Thomas Lewis, a lawyer at Stevens & Lee, says the lawsuit will be challenging to win because of the wirehouse’s considerable legal resources.

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FAs jumping ship have been increasingly accused of leaving their former employers with more information than is permitted. Fidelity previously sued an FA leaving for rival firm Merrill Lynch claiming the FA received $25 million of wrongfully diverted assets because of information the FA took with him.

By Garrett Keyes
  • To read the InvestmentNews article cited in this story, click here.