Morgan Stanley has decided to to leave an industry agreement known as the protocol for broker recruiting. The move is seen as an indication that the firm is working harder than ever to prevent its brokers from jumping ship.. One reason for that perspective is that Morgan Stanley managers were told on Monday morning that new employment agreements may include a one-year non-solicit agreement.
Under such an agreement, Morgan Stanley brokers moving to a new firm would be forbidden for 12 months from contacting clients once they left, according to those sources. Morgan Stanley intends to withdraw from the protocol on Nov. 3. Morgan Stanley advisers were told in an email Monday that the firm would enforce client confidentiality and non-solicitation agreements. Morgan Stanley on Monday said that as part of its effort to reduce recruiting and emphasize training it was pulling out of the protocol, a more than decade-old industry agreement designed to limit litigation against brokers when they moved from one firm to another.
Before the 2004 agreement, it was not uncommon for large firms like Morgan Stanley and Merrill Lynch to sue advisers when they left, commonly freezing clients from trading in their accounts. The protocol established a "universal set of rules for advisers to follow when leaving one protocol member firm and joining another," Morgan Stanley said in a statement. "However, over time the protocol has become replete with opportunities for gamesmanship and loopholes." According to the Morgan Stanley, firms have not been following the spirit of the agreement for some time. The announcement was part of a wider statement about Morgan Stanley's efforts to support existing advisers.
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