Broker Check


| November 02, 2017

In a surprising announcement, Morgan Stanley says it will no longer remain a member of the broker Protocol effective Friday, November 3rd. Here is an article on this topic posted on THINKADVISOR.

Most in the financial industry already know recent recruiting trends show gains for the Registered Investment Advisor (RIA) and independent channels. Although Morgan Stanley claims its new focus is on adding technology and other resources for existing representatives, might it also intend to hold tight to their financial advisor’s client assets if the advisor decides to leave the firm?

It’s hard for me to believe wirehouse firms have failed to learn that clients do business with their financial advisors – not with the firm. Holding, or attempting to hold, their own advisors hostage with non-compete arrangements or threatening legal retaliation have never been winning strategies. Apparently giving representatives “free will” to stay or go is just too difficult financially for wirehouses – so they resort again to chains and shackles.

I agree with others who say they won’t be surpised to see other big firms follow suit and drop membership in the Protocol. What this means for financial advisors who are just about ready to resign, or those evaluating the independent channel, is anyone’s guess. Will the firm honor their prior commitment to let advisors leave with a limited amount of client data and no retaliation? Or are we stepping back to a time when temporary restraining orders and arbitrations were the rule rather than the exception?

If you are working with one of the major firms and harbor any intention of pursuing an alternative to your employee relationship, I suggest you escalate the review. Take the steps you need sooner rather than later to avoid getting caught in a potential avalanche of Protocol terminations.

If you want to explore independence and what it takes to make the transition – feel free to give me a call at 636-779-1604. Even if our firm isn’t the right fit for you, I will be glad to share with you my 30+ years of experience in the independent space.