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By Neil Weinberg and Katherine Chiglinsky
(Bloomberg) --Has a 13-year truce in the brokerage world come to an end?
The rapid-fire exits of UBS Group AG and Morgan Stanley from a pact that grants financial advisers a free pass to hop jobs with client data in tow has rattled the industry, raising questions about whether the arrangement is about to unravel entirely.
The agreement, known as the Protocol for Broker Recruiting, is likely to survive -- if for no other reason than the lack of palatable alternatives, according to industry observers.
“My cynical view is that a lot of firms are saying ‘We’re not concentrating on recruiting’ and might get out,” said Dennis Concilla, an attorney who runs a website that tracks the agreement. “But the protocol may always be of some value to some people,” given the high cost of litigating over departures and the need for guardrails in handling sensitive client data, he says.
Doubts about the future of the protocol flared Monday when UBS announced its intention to withdraw from the pact. A month earlier, Morgan Stanley revealed similar plans. Both companies said membership no longer made sense at a time when they were focused on grooming advisers internally rather than on recruiting.
In announcing its withdrawal, Morgan Stanley added that the protocol had become “replete with opportunities...