The 13-year Itch

Morgan Stanley finally left us.  We all feared this would happen and we even thought about leaving too.  How did we get here and what do we do now?  We will take the role of a marriage counselor in this post and remind us why we married in the first place and what we can learn from our mistakes.

History of Protocol

When the Protocol began in 2004 there were three firms that believed the agreement would save them money and reduce lengthy legal battles.  It did both but it also encouraged two established law firms to support advisors who wanted to use The Protocol and breakaway from Wall Street.  One of the two firms published a good summary of The Protocol that is worth reading.

RIA Growth

Over the years more firms began to join The Protocol and as of today over 1,700 firms are Protocol members.  Most are RIAs that are growing by winning new clients and advisors from the original three firms.  We seem to have reached a tipping point that has demanded the attention of Mr. Gorman.  My bet is it is more than the relentless research reports and the financial press articles proclaiming assets are leaving Wall Street and moving to RIAs -  it could have been a large broker, that Mr. Gorman knows, resigning and that departure was the final straw.  We will never know, but RIABiz seems to agree with me.


Now that The Protocol appears to be on its final lap - what should established firms who would like to add advisors that currently work on Wall Street do?  The move by Morgan Stanley feels like a game of chicken.  The large Wall Street firms have deeper pockets and lawyers at the ready.  Small independent firms have neither and must insure that their actions don’t allow the Wall Street lawyers to win when they file a Temporary Restraining Oder (TRO).  There are knowledgeable lawyers who can provide us with a checklist of don’ts that we and our new advisor must follow.  Morgan Stanley seems to want to play their non-solicitation agreement card dealt in the advisor's original employment agreement  If they want to go old school we can too by sending  out an announcement of our new firm and our contact information (Wedding announcement).  If the client calls us - game on.  I recently attended a conference and sat at the same table with several current Wall Street advisors.  They all had two mobile phones.  You might want to take the phone that you bought when you leave. It appeared to be a nicer phone.

The statistics that marriages typically run into problems after seven years spawned the Seven Year Itch.  It’s been 13 years since The Protocol began in 2004 so a 13-year itch isn’t that bad.  What we do next after we scratch is important.  Most people remarry after the Seven Year Itch.


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