Fidelity recently surveyed a group of financial advisors across different segments of the business about the impact of major firms leaving the Protocol for Broker Recruiting.
“We’re now four months past the initial news — and Fidelity has some data indicating how advisors are feeling,” said David Canter, executive vice president and head of the Registered Investment Advisor Segment for Fidelity Clearing & Custody Solutions, in a LinkedIn post this week.
The results paint a somewhat confusing picture of what increasingly is becoming a more complex recruiting and breakaway-broker landscape. What is clear is that a large number of advisors are feeling negatively about the departure of major firms — such as Morgan Stanley and UBS — from the deal.
“Have these changes put a chill on advisors considering independence or switching firms?” Canter asked. “As we had originally suspected, not completely, though there are different concerns.”
For instance, 44% of those surveyed by Fidelity say departures from the protocol would affect their ability to bring clients with them to their new firm.
This concern is prompting 38% of advisors polled to carefully vet firms that will protect them through their transition. And 30% expect lower recruitment bonuses, as new firms are moving to offset any legal costs tied to the latest developments affecting the protocol.
Overall, more than one-third of those surveyed say the firms leaving the protocol — such as Morgan Stanley, Citi and UBS — are likely to experience detrimental effects, while nearly half of advisors believe that firms staying in the protocol will be more attractive to advisors aiming to make a move.
“These departures could have a big impact on recruiting. Advisors who are switching from brokerages that recently left the Protocol have unique needs,” Canter explained in a statement. “Firms should think about what they can do to support those advisors – whether it be alleviating concerns around legal costs or helping to establish clients at the new firm.”