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Why the Broker Protocol May Matter More Than Ever

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I come across advisors who worry their firms will stop honoring the Protocol for Broker Recruiting one day. Here’s why that would be a mistake that might cripple the trust the Protocol now brings to both advisors and the firms they work for.

The Protocol is the seminal accord among brokerage and advisory firms that some 11 years ago gave financial advisors the freedom to leave a firm, hold on to their clients and avoid costly legal battles. At the same time, the interests of the firms they would leave behind would be protected.

When originally enacted, it sent a message to all financial advisors that there was a sacred bond of trust between them and the firms they worked. The Protocol proved to advisors that they didn’t need to go independent in order to feel ownership of their businesses. In return, they showed their firms loyalty and worked in the best interest of their clients.

I know advisors who worry the Protocol could get dropped by their firms. Indeed, there has been some industry speculation that some firms are considering dropping the Protocol to stem attrition. For many advisors that would be a deal breaker that might prompt them to look for new jobs. So it wouldn’t serve them, nor their firms, well to eliminate such an important accord. Consider the level of trust that it creates.


When my children were young and they asked to go to a party, I allowed them to make their own choices of whether to go or not, even if I didn’t think they should attend. I did this because I wanted to send a message of trust, and these were “low stakes” opportunities to show I trusted my kids.

The result was almost always better than I ever could have hoped for. My children often chose not to go where I didn’t want them to go, or at least made sure they were acting appropriately when they did go. Allowing them to make their own decisions, on their own terms, empowered them, strengthened our relationship, and fostered greater trust and communication between us.

Most people are guided by a natural desire to act independently, and I am pretty sure that if I had taken that ability to act independently away from my kids, and forced them to make decisions they didn’t want to, the results would have been different.

It’s the same as having the right to choose who we think should be our next president, what car we drive or cereal we eat for breakfast. It is the freedom of choice that’s at the cornerstone of the American experience.

The Protocol provides that pillar which connects advisors and their firms, whereby they share a sacred trust; a covenant that says firms trust advisors to do right by their clients, and that advisors trust their firms will do right by them.

Maintaining a healthy relationship between firms and the advisors who have dedicated their business lives to them is key to a culture of mutual respect, and as such, the result will also strengthen loyalty for both sides, and do more to limit attrition than the bad choice of dropping the Protocol.

Mindy Diamond is president and CEO of Diamond Consultants, a recruiting firm based in Morristown, N.J.

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