The Broker Protocol: End Of An Era?

Morgan Stanley and UBS – two of the largest wirehouses in the United States – recently withdrew from the Protocol for Broker Recruiting Agreement, commonly referred to as the "Broker Protocol." This move has raised much speculation as to whether other firms will follow suit. A domino effect of departures could lead to the demise of the Broker Protocol and the relative ease it has afforded advisors for over a decade to take their clients with them when switching firms or going independent without violating restrictive covenants against solicitation and competition or regulations that protect the privacy of client information.

The Broker Protocol is a voluntary agreement among member firms that sets forth guidelines for when and how departing advisors can solicit clients to transfer their business without the fear of being hit with lawsuits or restraining orders. Such costly, and sometimes protracted, legal battles over clients – and control of management of their