Advisors are unsure about how the departures of UBS and Morgan Stanley from the Broker Protocol will impact the industry, according to a new study from Schwab Advisor Services.
Schwab Advisor Services’ Spectrum of Advisor Independence Study surveyed 152 U.S. financial advisors that have considered becoming independent registered investment advisors (RIAs). The data provides insights into the considerations and expectations of these advisors as they evaluate a move to independence.
The report included perspectives on the impact of the Protocol for Broker Recruiting.
According to the study, 43% of advisors currently work for firms that operate under the Broker Protocol. Comparatively, 33% work at firms that do not operate under the protocol, and 24% don’t know.
The study found that there is widespread uncertainty about how the protocol will impact future advisor industry movement, particularly as fewer major firms are signatories.
Advisors in the survey were asked what they thought the impact of the protocol would be on advisor movement, and 66% weren’t sure how what affect it would have. However, 16% thought it would slow advisor movement, while 9% thought it would increase movement and another 9% thought it would have no impact.
“[Advisors] are not sure what that means for their ability to transition,” Tim Oden, senior managing director of business development at Schwab Advisor Services, explained. “I’m quite certain that their current employer is not going to clarify that for them.”
According to Oden, when Morgan Stanley and UBS exited the protocol a year ago, there was a lot of concern that if the protocol went away, it would affect the ability of brokers to move to independence. Signatories to the protocol let departing advisors take essential client information with them.
In January, the Nuveen/DeVoe RIA Deal Book predicted the industry would likely experience a decrease in breakaway activity if additional firms withdraw from the protocol.
According to Schwab’s recent report, though, the protocol has largely had a neutral impact on the move to independence. Advisors were asked if the changes to the broker protocol decreased or increased their interest in going independent, and 66% reported it had no effect. Similarly, 73% of advisors surveyed said the changes to the Broker Protocol had no impact on the timing of their plans to go independent.