Some Fleeing Broker-Dealer Pact

Posted by adaniels in Blog on August 9, 2012

There is a pact that many broker-dealers have regarding protocol during recruitment. But Investment News reports that some are breaking away from the deal.

In the protocol, which has 839 members, it “permits individual advisers to take basic customer contact information when they move from one protocol signatory to another,” Investment News says. The pact was started by Citigroup, Merrill Lynch and UBS Financial Services in 2004, and the idea is to stop disputes over non-compete clauses.

Just in 2009, 278 firms signed on to the deal, a record, but the pace of companies signing the pact has slowed. This year, only 100 companies have signed on, and 162 agreed to the deal in 2011. In addition, some companies are breaking away from the pact. Focus Financial Partners, Buckingham Asset Management and Sigma Investment Counselors have all pulled out of the pact in recent months.

Adam Birenbaum, CEO of Buckingham, said that “we’re focusing on the RIA space, so we just didn’t see a need or value in being part of it.” And Robert Bilkie, head of Sigma Investment Counselors, said: “In 40 years in the business, we never hired someone who had worked before as a broker,” so they no longer felt the need to stick with the pact.


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