With Morgan Stanley and UBS officially out of the Broker Protocol, advisors need to prepare for life after the protocol.
More specifically, how you can best position yourself should you want to consider making a move in what has quickly become a post-protocol world?
Put aside the feelings of fear or anger, and focus instead on some changes that you should incorporate into your daily routine. Here are eight tips to start with:
1. DIG UP YOUR EMPLOYMENT CONTRACTS
Dust off any employment agreements, such as a retention or partnership agreement or compensation plan that you may have signed in the past, and review any provisions therein. Look for non-solicitation language, which could impact a future move.
If you don’t have a copy, DO NOT ask your firm for one! Doing so would raise a red flag.
In the absence of the actual agreement, bear in mind that the industry norm is for advisors to be subject to some non-solicitation provision, typically of one year. Learn what having a non-solicitation and any other relevant provisions mean under your state’s laws. Attorneys who specialize in securities law will be familiar with these agreements, even if you can’t produce your own.
2. KNOW THE LIMITS OF NON-SOLICITATION AGREEMENTS
Recognize that a non-solicitation provision impacts how you communicate with your clients after a move to another firm. Non-solicitation doesn’t mean non-communication, though. While it typically prohibits an advisor from asking clients to follow him to a new firm, it doesn’t prevent an advisor from speaking with his clients. Advisors can still reach out to clients to notify them of a move. It certainly doesn’t prohibit an advisor from speaking with a client who has reached out to him, nor from accepting a client’s unsolicited request to follow him to a new firm. Just know where to draw the line in your conversations, so it’s clear that you haven’t solicited them.
3. IDENTIFY YOUR MOST IMPORTANT CLIENTS
Do you know their names from memory? Can their contact information be found through searches on the Internet or through other public sources? Post-protocol, advisors will not be permitted to take client contact information with them (i.e., name, address, telephone number and email address), which was allowed under the protocol.
Advisors, with the help of a prospective new firm, can develop creative new strategies for reaching clients after a move, which don’t violate the restrictions of their employment agreements. For example: Do you receive holiday cards from your clients? This may become helpful. Clients and advisors often travel in the same circles and frequent the same spots, and this can be leveraged as well. Also consider informing centers of influence after your move, so they can help disseminate the news.
4. MAKE IT EASY FOR CLIENTS TO FIND YOU
Since you may not be able to immediately contact all of your clients, make it easy for them to find you. Are you active on LinkedIn and Facebook? The widespread acceptance of social media and everyone’s visibility on the internet are some of the biggest differentiators from pre-protocol days. Use this to your advantage! Understand your firm’s policies regarding the use of social media in communicating with clients so that you can incorporate this appropriately into your current process.
5. THINK ABOUT HOW YOU USE YOUR PERSONAL CELL PHONE
What is your firm’s policy regarding the use of personal cell phones to communicate with clients? Do you routinely speak with clients from your personal cell phone, and do they use that number to contact you? Many clients routinely call their advisor on his or her cell, especially when the advisor is out of the office. This is often a normal part of an advisor-client relationship. Consider whether cell phone histories and contacts can be useful.
6. DO YOU MANAGE DOCUMENTATION FOR YOUR CLIENTS?
Many advisors add value to their clients by helping them keep important information and documents organized and accessible. Advisors often provide clients with a file of this information during quarterly or annual reviews so that clients can maintain this for easy reference. It’s a process that can be helpful now and in the future.
7. KNOW WHAT IT MEANS TO MOVE FROM A NON-PROTOCOL FIRM TO A PROTOCOL FIRM
While the move may still be subject to the terms of your employment agreement and not governed by the protocol, there are still benefits to joining a firm that is committed to remaining within the protocol or is committed to respecting and protecting an advisor’s choice and ownership of the client relationships. Remaining under protocol sends a distinct message to advisors, including the firm’s current community and prospective hires. It says “we trust and respect you as fiduciaries and will not try to hold you captive, nor make it more challenging for you to move if you determine that your clients are better served elsewhere.”
8. DON’T PANIC AND DON’T FEEL STUCK
The governing principle — that you should stay with a firm as long as it serves you and your clients best — still holds true. While the processes may have reverted back to pre-protocol days, the paramount importance of the advisor-client relationship has never been stronger. The financial crisis and subsequent industry evolution have redefined the firm-advisor-client dynamic. Clients identify first and foremost with the personal relationship they have developed with their advisor, and the firm has become, in most cases, a more incidental player. Advisors often tell me that over time, that longstanding clients have become friends and the significance of this has never been more relevant as advisors look to maintain these relationship should they move in the future.
There is no doubt that the wirehouse departures from the protocol change the process of a move and may alter where an advisor ultimately decides to go. However, some creativity and a willingness to adopt a few strategic practices will allow advisors to navigate this new world successfully. Be assured that there are top industry attorneys and thought leaders already hard at work creating new and better ways for advisors to move in this post-protocol world. Sometimes we find that in adaptation there is better opportunity.
One thing is certain: No one is traveling in this new world alone — there is plenty of support ready to guide you.