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12.20.20 | What Is The Broker Protocol Agreement

InvestmentNews data, while incomplete, shows that wear and tear at Morgan Stanley has been cut by almost half since it was removed from the brokerage protocol. For the 12 months to September 2016, the year before the company left, InvestmentNews counted 70 individual teams or consultants who left Morgan Stanley for its competitors. For the same period that ended in September, only 38 remained. So four brokers with a huge collective pound of the economy – $870 million in assets under management – snatched the defeat of the Pins from victory by ignoring protocol, and as a result, they lost the protection that protocol would otherwise have afforded them. Since 2004, the brokerage protocol has expanded from 3 founding companies to nearly 1,500 and is the essential roadmap to enable a broker to leave his broker dealer in the cleanest and most efficient way. The good news is that in the years following the first signing of the brokerage-protocol agreement, thousands of brokers made successful transitions from their original broker-dealer. However, brokers have always made it clear that any broker who does not fully and fully comply with the brokerage protocol can still be aggressively sued to limit their actions. What about the terms of my employment contract? Many registered representatives have employment contracts that provide conditions prohibiting the recruitment of clients or the storage of client lists. As long as the old and new companies are signatories to the protocol and the registered representative essentially complies with its conditions, the protocol provides that the registered agent cannot, vis-à-vis the former company, be held responsible for the retention of the information covered in the protocol or for the request of customers on behalf of the new company.

Tired of having to pay six-figure bonuses to replace some of their most productive brokers who left their competitors after the financial crisis, Morgan Stanley Wealth Management and UBS Financial Services re-elected the asset management industry a year ago by withdrawing from an agreement known as the broker recruitment protocol. This was a determined attempt to hold on to more of their brokers. As more and more companies have signed the protocol over the past decade, the number of Raiding and Departure Cases has decreased significantly, giving brokers, who are considering moving from a protocol to a protocol, the assurance that if they follow the letter and spirit of the protocol, they will have a high probability of a smooth transition. The conditions of competition have been significantly aligned and the protocol has established a framework that allows a registered representative to leave one undersigned company for another, with reasonable assurance that, as long as the protocol is followed, the likelihood of being brought to justice and sanctioned by an injunction or injunction will be greatly reduced. Of course, brokers who leave a non-signatory company or leave a sub-signature company for a non-signatory company do not have the protection offered by the protocol when they move from one protocol company to another. The protocol only covers the transition from a protocol to a protocol company. Major companies that have decided not to become members of the protocol include Schwab and Fidelity. When the time comes to make the transition, a decisive step in the process is the establishment of a clean and correct process of resignation of the current broker-trader.