UBS is reinforcing non-solicitation language in advisors' deferred compensation agreements, potentially enhancing the firm's ability to bar advisors from contacting clients should they leave to work elsewhere, according to documents seen by On Wall Street.

The policy change coincides with shifts in the industry following the departure of UBS, Morgan Stanley and Citigroup from the Broker Protocol, an industrywide accord that eased advisors' ability to switch employers and take their clients with them.

Some industry insiders have expressed concerns that firms exiting the protocol could begin vigorously enforcing non-solicitation agreements with departing brokers.

Morgan Stanley has already filed several lawsuits against former advisors attempting to contact their clients since the firm left the protocol in November.

UBS, which followed Morgan Stanley in leaving the protocol in December, has not filed similar lawsuits. But under the new non-solicitation policy, the firm's legal standing could be enhanced should UBS seek an injunction one day to block a former advisor.

"The agreement is significant because it puts a new restriction on registered reps," says Barry Lax, an attorney at New York law firm Lax & Neville who represents advisors.

The new policy sets out a 12-month period from an employee's departure from the firm in which they cannot contact clients, according to the documents. Advisors will be asked to sign the agreements in order to receive their bonuses.

UBS takes “solicit” to mean the advisor will not initiate any communication of any kind to encourage a client to transfer their accounts to the advisor's new employer, according to the documents.

It's not clear whether the measure as written is broad enough to encompass social media. The Broker Protocol also did not include social media, permitting advisors only to take client names, phone numbers, physical address and email address. Even without protocol protections, advisors may be able to get around those hurdles through LinkedIn, Twitter and other platforms.

A company spokeswoman declined to comment on the shift.

Under the old policy, there was non-solicitation clause, but it applied only if the departing advisor did not pay back any outstanding balances owed to UBS.

"This is a clean and effective way for UBS to go into court and say, 'It doesn't matter what happened in the past. We have a new agreement and by signing this, the broker has agreed to a non-solicit,'" says Tom Lewis, a lawyer at law firm Stevens & Lee. "It really clears up UBS's potential legal action. They have a much stronger hand now."

While UBS's policy shift introduces stronger non-solicit language into annual bonuses, it is common practice at many firms for retiring brokers to sign agreements containing ironclad non-solicitation clauses in order to receive bonuses in exchange for the clients. The policy changes were first reported by AdvisorHub.

But UBS's new policy may put some brokers who have plans to switch employers this year in a tough spot.

"If you're an advisor, you have a choice. You can bypass your bonus or agree to this 12-month non-solicit. It looks like the choice is yours," Lax says.

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