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.
Next
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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