NAPLES, Florida -- Janney Montgomery Scott is on a hot recruiting streak, and upheaval with the Broker Protocol isn't like to slow it down any time soon, President Jerry Lombard says.
Once wirehouse advisors see they can continue to jump ship without triggering lawsuits from their former employers, the breakaway trend will resume, he says.
"We have figured out a path for these FAs to maintain their freedom of movement," Lombard says. "But I'll be honest. I think a lot are running scared. They've seen others get slapped with a [temporary restraining order] and that creates uncertainty, and no one likes uncertainty. But once the industry sees more of these wirehouse FAs leave successfully then I think the floodgates will open."
Last year, UBS and Morgan Stanley left the protocol, an industrywide accord that permitted advisors who switched firms to take basic client contact information with them. Together, the two wirehouses have about 22,000 advisors. While Morgan Stanley has launched several lawsuits in recent months to block exiting advisors from contacting clients, a handful of advisors have left UBS without triggering such lawsuits.
Janney, meanwhile, is already on pace to match last year's robust recruiting efforts. In the first three months of 2018, the firm netted 11 new hires managing nearly $1 billion in client assets ― putting it one recruit shy of what it brought in during the same period a year ago, according to Lombard.
Overall, Janney pulled in 65 new hires in 2017, up from 46 for 2016 and making it the firm's highest number of recruits since 2009 when it enticed more than 90 financial advisors.
Investments in the firm's technology platform, a new director of recruiting and other efforts have boosted the firm's appeal to new hires, Lombard says. Jeff Smith, a complex manager at the company, was appointed director of recruiting in 2016.
"We took what was a good result from a hiring standpoint and put a supercharger on it," Lombard tells On Wall Street on the sidelines of SIFMA's annual private client conference.
The regional BD's size ― it has approximately 800 advisors ― is also appealing to brokers, he adds. And the company works with both in-house and outside legal counsel to help advisors leaving from non-protocol and protocol firms to avoid making any missteps that could trigger legal problems.
Of course, it's not the only one benefiting from advisor movement, as a number of brokers have exited the wirehouses to join independent or regional firms citing what they say are better working conditions. In 2017, advisors managing nearly $40 billion went independent, according to data collected by On Wall Street. Advisors overseeing about $36 billion joined regional BDs that same year.
A home-office visit by an advisor is part of the recruiting process at Janney Montgomery Scott, as it is at some other firms, such as Raymond James and Stifel. Last year, Lombard says he met with 120 prospective new hires (the firm ultimately hired slightly more than half that number).
Janney, which is based in Philadelphia, organizes meetings with key staff and customizes the agenda for advisors.
"We'll even do special sessions for the client service associates," says Caitlin Ulmer-Long, director of business productivity.
Janney's hiring push has also included the opening of new branches. In recent months, the firm launched new locations in Columbus, Ohio and Battle Creek, Michigan. But the firm, which primarily has a focus on the East Coast, doesn't have plans to "leapfrog" too far afield.
"They are the contiguous states of our traditional footprint," Lombard says. "We don't want to outrun our supply lines."