The wirehouses are no longer actively recruiting experienced and well-producing advisors how long will it take before we start to see Protocol Member defections?
Protocol makes it relatively easy right now for advisors to move to and from Protocol firms. It affords the departing advisor with a lot of protections if the advisor acts in good faith in following Protocol.
Since the wirehouses have shifted from a recruiting strategy to a retention strategy, the focus isn’t on how many advisors come in the front door but rather on how many are exiting through the back.
If this recruiting strategy persists, then the benefits of ease Protocol provides for inbound recruiting, may be outweighed by the benefit of the barriers that exist with a non-Protocol recruiting move.
When firms are more concerned with getting recruited out of than they are recruiting into, then the need for Protocol (at least in its current form) may change.
Edward Jones is good example. Edward Jones is not a member of Protocol because they don’t really recruit from the competition. They home grow their advisors and then will try to hang on to them for as long as they can. Sounds like the exact recruiting strategy now being implemented by the wirehouses.
Even without Protocol recruiting happens. Edward Jones loses advisors every year to the competition. It just may take a little extra work and a settlement arrangement to make it happen.
Protocol has been a game changer for the Financial Advisor recruiting industry going from three firms to over 1500 firm members. No one in recruiting wants to, or expects it, to go away anytime soon.
It wouldn’t surprise us if a wirehouse whose recruiting strategy is more in line with Edward Jones, pulled out of Protocol at some point in the future. Protocol members can disengage from Protocol with a short notice. If this happens, it will be interesting to see if other dominos fall as well.
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