More broker-dealers join hiring protocol
A growing number of independent brokers and advisory firms are joining the industry's recruitment protocol to take advantage of a ripe hiring market.
A growing number of independent brokers and advisory firms are joining the industry’s recruitment protocol to take advantage of a ripe hiring market.
In total, 153 firms had signed on to the pact by early February — 65 of them since mid-September when the financial crisis accelerated and many wirehouse reps began looking for alternatives. Most of the companies that have signed the protocol are smaller broker-dealers and advisory firms.
The protocol lets brokers take basic customer contact information with them when they change firms, smoothing account transfers. The pact helps avoid litigation over alleged theft of trade secrets and confidential client information.
In 2004, Merrill Lynch & Co. Inc., UBS Financial Services Inc. and Citigroup Inc., all of New York, an-nounced the pact and became the original signatories. After that, a trickle of firms signed on.
In recent months, many more firms have joined or considered signing up, said attorney Patrick J. Burns, whose eponymous Beverly Hills, Calif., firm represents brokers who go independent.
GOLD RUSH ERA
With many brokers looking for new employers, “it’s kind of a gold-rush era” for independent firms, he said.
Brokers can set up their own company and sign the pact, even if their broker-dealer isn’t a signatory. Investment advisory and other financial firms also can join. Existing firms see the protocol as a way to open their doors to displaced producers.
“I see a large opportunity to bring reps over from wirehouses,” said Morrie Reiff, chief executive of AFA Financial Group LLC, a Calabasas, Calif.-based broker-dealer that plans to sign the protocol.
The big firms are “letting go of low-producers, [but] I love those people,” he said.
“We’re planning [to hire] 75 [additional brokers] this year,” said Tom Schirmer, a partner with Delaware Valley Financial Group Inc. in Conshohocken, Pa., a 140-rep firm that signed the protocol this month.
Meanwhile, Bank of America Corp. of Charlotte, N.C., last November said it would comply with the agreement. But the bank has yet to sign it. That inactivity has caused some observers to wonder if the bank will come through on its promise to sign, especially in light of its acquisition of Merrill Lynch.
“Merrill Lynch financial advisers will continue to be able to move between protocol firms” as always, said Jon Goldstein, a Boston-based spokesman for Banc of America Investment Services Inc. The combined firm will become a member of the protocol as previously announced, he said.
The bank revised its contract for Merrill reps last November by adding language saying that it expected to follow the recruitment protocol. The revised contract was a reaction to growing anxiety among Merrill producers about the bank’s employment agreement.
But Mr. Burns wonders why Bank of America hasn’t yet joined. “It’s not that difficult to sign,” he said.
Banc of America Investment Services “continues to determine the specifics of how and when it will become a member of the protocol,” Mr. Goldstein said.
E-mail Dan Jamieson at [email protected].
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