Raymond James reaffirmed its commitment to staying in the Broker Protocol even as many of its rivals kept mum on their intentions with regard to the accord.
The protocol, which came into effect in 2004, is a sort of truce between firms, designed to ensure an orderly transition when advisors move from one firm to the next. But its future has been in doubt since Morgan Stanley unexpectedly announced that it will leave the pact at the end of the week.
Stifel's CEO predicted the pact would unravel without the support of the industry's biggest players.
"The largest firms brought it [into existence], and the largest firms will take it out," Ronald Kruszewski said Monday. His firm has ramped up recruiting efforts this year.
Spokeswomen for Wells Fargo and Merrill Lynch have declined to comment on the matter. A spokeswoman for UBS could not be reached for comment.
"At the end of the day, it might be Morgan Stanley and only Morgan Stanley that decides they can't compete with their competitors without these restrictions in place," says attorney Brian Hamburger, whose law firm in Engelwood, New Jersey, has represented wirehouse advisors going independent.
For Raymond James, advisor choice was a critical factor in its decision, the firm says.
"Because we believe that the advisor-client relationship is integral to putting a client's interests first, Raymond James remains committed to supporting and embracing the principle that advisors own their practices," the company said in a statement. "In that spirit, we intend to continue participating in the broker protocol. Other firms' decisions regarding protocol will not impact our commitment to supporting advisors' freedom to select how they affiliate with Raymond James or how they manage their business."
The St. Petersburg, Florida-based company has been an aggressive recruiter of employee and independent advisors. The firm's brokerage force hit a record 7,346 at the end of the third quarter, Raymond James reported recently.
Many of the firm's new hires have cited what they see as a broker-friendly culture as a primary reason for making their career change.
But it's not just Raymond James that has been luring away wirehouse talent. Regional and independent firms such as RBC Wealth Management and Janney Montgomery Scott have notched big recruiting successes based on similar appeals.
WHY MORGAN STANLEY IS EXITING
For its part, Morgan Stanley says it is leaving the protocol because there are too many loopholes that competitors are exploiting.
JPMorgan Chase, for example, has been accused of employing a double standard, signing up some of its business units but not others.
However, some industry insiders contest that the situation is not quite as severe as Morgan Stanley alleges.
"In point of fact, there have been [approximately] 1,700 firms to join the protocol. But over that same period of time, only 104 have left the protocol," says Dennis Concilla, an attorney who has been involved in maintaining a list of protocol member firms.
Of those departures, some were firms that went out of business or merged with another firm, Concilla says. For example, Smith Barney, one of the three original members, was acquired by Morgan Stanley after the financial crisis.
Perhaps a half dozen were short-term members, joining just one month and exiting the next, says Concilla, who works at Carlile Patchen & Murphy, a law firm in Columbus, Ohio.
"In deference to Morgan Stanley, they may have joined to hire one person. And once they did that, they left," he says.
Morgan Stanley cut back on recruiting efforts earlier this year. The wirehouse's exit from the protocol takes effect Nov. 3.
"Morgan Stanley will continue to expect departing advisors to honor their non-solicitation obligation after we exit the protocol," a spokeswoman says.
Recruiters note that there were plenty of advisor moves prior to the protocol's creation in 2004. Indeed, Raymond James and Stifel say they'll continue to enjoy recruiting success based on the same appeals to culture and freedom they are making now.
"We've always tried to be a firm where you want to come in and work and want to stay. We think that will win over the long run over some of these hurdles that are being put in place," Kruszewski said.