NAPLES, Fla. ― Forget whether the Broker Protocol may survive ― Raymond James's Tash Elwyn is already calling for a newer, more robust version of the industry agreement.
"It's time to set aside lip service. If our profession truly cares about the well-being of our clients to the extent that the profession professes, then we need to swing this pendulum in the other direction," says Elwyn, president of the firm's employee broker-dealer.
His comments come about six months after Morgan Stanley and UBS left the Broker Protocol, a 2004 industrywide agreement that permits advisors switching firms to take basic client contact information with them. Industry insiders have speculated whether the protocol would survive without their presence as the two firms have about 22,000 financial advisors.
In the past few months, Morgan Stanley has launched several lawsuits to block departing advisors from soliciting their clients at the firm. That could have a chilling effect on the flow of advisors from wirehouses to smaller rivals. In recent years, increasing numbers of wirehouse advisors have gone independent or joined regional BDs such as Raymond James, Janney Montgomery Scott and RBC.
Elwyn spoke on the sidelines of SIFMA's annual private client conference about protocol, recruiting and the need to address the lack of diversity among financial advisors. Below is an edited conversation.
How has the departure of some firms from the Broker Protocol affected recruiting?
It has had impact in terms of some advisors who are less confident and less willing to transition their businesses because of fear of what a non-protocol transition will feel and look like.
There's been impact there. And we are working to educate them on the years of experience and success Raymond James has had in terms pre- and post-protocol.
There's also impact in that there’s an equal, if not greater, number of advisors at non-protocol firms who are incensed at these decisions. It might be the straw that broke the proverbial camel's back. It's got these advisors to do due diligence on whether there is a better home for them and their clients.
And there is also a spillover effect in that advisors at other protocol wirehouse firms are doing soul searching as they contemplate the fate of protocol at their firm.
I think this whole topic is a good segway to protocol itself. It's time to set aside lip service. If our profession truly cares about the well-being of our clients to the extent that the profession professes, then we need to swing this pendulum in the other direction. Whether you want to call it protocol 2.0 or just a higher standard of care, I believe advisors should be able to choose the financial institution they believe is best equipped to meet their client needs. If it's not the firm with which they are affiliated today, then they should be able to move.
That to me is where this conversation should be moving. Raymond James is committed to the Broker Protocol, but more importantly advisor choice.
Are you hopeful that a Broker Protocol 2.0 would come about? What would it look like?
We should differentiate first between protocol and book ownership and choice and freedom.
Protocol simply means a financial advisor can solicit their clients when moving from one firm to another. As important as that is, one shouldn’t confuse that with freedom, choice and book ownership. As I invite colleagues throughout the profession to join us in an evolution to what I refer to as protocol 2.0 and this higher call to duty, it's one in which I would call it more a hope than a reality. It would require a shift in thinking for many today.
Where are you looking to recruit more? Any specific region?
We have a top-down strategic focus as well as one in which we are bottom up opportunistic. What I mean by that is from a top-down viewpoint, we recognize there are growth opportunities in the Northeast and West Coast. Those are markets that, historically speaking, have been newer geographies for Raymond James & Associates [the firm's employee broker-dealer]. There's obviously tremendous affluence in those geographies as well as a concentration of advisors.
At the same time, we can be opportunistic from a bottom-up perspective in that we affiliate with advisors who share our values.
What are your expectations with regard to the SEC moving closer to promulgating its own fiduciary standard?
I'd rather not speculate. I'd reserve comment until I see the proposal.
What's important for Raymond James is that we as best as possible maintain choice for clients and advisors.
You've recently spoken out about the need for the industry to better address the lack of diversity among the financial advisor ranks. If the industry were to make one change regarding how it tackles this problem, what would you want it to be?
I'd love to see our professions stand shoulder-to-shoulder on a campus, for example, to demonstrate to diverse candidates that we truly value what they would bring.
That unified message would be much louder, stronger and clearer.
We've done several times pilot programs with some competitor firms and they've met great success. It does make a difference.
I'm not naïve in thinking this suggestion will change the complexion of wealth management overnight. But it's an example of an incremental step of how our industry can work better together.