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Merrill Lynch Sends a Message With Broker Protocol Decision

December 5, 2017

Merrill Lynch, unlike its wirehouse rivals, plans to remain a signee to the Broker Protocol, InvestmentNews reports.

UBS announced plans to exit the broker recruiting agreement last week and Morgan Stanley pulled out in October, with many recruiters predicting Merrill Lynch would follow suit. But Andy Sieg, Merrill Lynch’s head of wealth management, told senior managers in a call yesterday the firm intends to stick with the protocol, a source who chose to remain anonymous tells InvestmentNews. Sieg said Merrill Lynch continues to assess the competition but isn’t making plans to withdraw, the source tells the publication. Sieg added while Merrill Lynch’s competitors want to get out of the protocol to hold on to their advisors and clients, the firm will instead focus on helping advisors bring on more clients, according to the source.

Recruiters have speculated Merrill Lynch would exit the protocol, which was established in 2004 to let advisors take some client information when switching firms without the threat of a lawsuit, because the accord made it easier for RIAs and independent broker-dealers to poach advisors from wirehouses.

Some recruiters predicted Wells Fargo Advisors, the only other wirehouse, would stay on because it has lost many reps following a bogus account scandal at its parent company’s banking unit.

But while some have predicted an end to the protocol entirely, others say there’s no workable alternative that would satisfy regulators and judges who would otherwise see a spike in restraining orders against departing advisors.

At least 18 firms have withdrawn from the protocol in 2017, as reported, but 1,696 remained as of last week.


Ross Intelisano, an attorney with Rich, Intelisano & Katz LLP, who represents advisors, tells the Wall Street Journal UBS and Morgan Stanley have experienced a backlash following their exit from the protocol, so Merrill Lynch’s decision is “smart.”

Merrill Lynch’s decision to stay on also differentiates it from its wirehouse rivals and could help it lure advisors, he tells the paper.

A veteran Merrill Lynch advisor, meanwhile, tells the Journal the firm is sending “a fantastic message” to its own brokers as well as those at other firms.

“It’s going to keep a lot of people in their seats” at Merrill Lynch, the advisor tells the paper.

Reps for UBS and Morgan Stanley declined comment to the Journal.

Wells Fargo Advisors, meanwhile, is “watching and have not made a decision,” a spokesperson for the wirehouse tells ThinkAdvisor.

Executive search consultant Mark Elzweig tells the publication Merrill Lynch’s move means that exits from the protocol “will now come to a screeching halt.”

By Alex Padalka
  • To read the InvestmentNews article cited in this story, click here.
  • To read the ThinkAdvisor article cited in this story, click here.
  • To read the Wall Street Journal article cited in this story, click here.