Morgan Stanley Leaves Protocol – What Does This Mean For You?
As news surrounding Morgan Stanley‘s exit of the broker protocol continues to stir, we wanted to shed some perspective on what this means and how it might affect your business.
What is the protocol?
More than a decade ago, over 1000 brokerage & securities firms came together to outline the code for industry recruiting. The protocol was created to limit the amount of lawsuits filed over broker job changes by setting rules around client communication and contracts.
How will this effect brokerage firms’ recruiting efforts?
Morgan Stanley‘s move, as an industry giant, speaks loudly upon how brokerage firms are changing how they will approach hiring moving forward. Firms are shifting away from heavy recruiting, and towards retaining their current advisors and teams. The days of broker to broker poaching, otherwise known as “prisoner exchanges,” are nearing the end, and we will be seeing far fewer promisary notes and massive signing bonuses.
What does this mean for you?
“Without the industry protocol, advisors who are employees at wirehouses need to realize they’ve just become indentured servants.” – Ron Edde, CEO Millennium Career Advisors
Morgan Stanley‘s departure means it will be harder for it’s brokers to leave. When we start seeing the domino effect of this shift, exiting brokers will likely face an uptick in costly lawsuits and artbitrations. Is this a response to the increasing number of brokers (and clients) breaking away to the independent channel? It’s likely.
So what now?
The biggest takeaway for advisors from this news is that things are changing. There is no better time than now to think about positioning yourself for a sustainable, opportunity driven career. Pay attention to the longevity of your business, and even closer attention to the type of partners you want to surround yourself with.