In a stunning turnaround, Bank of America has agreed to abide by the “Protocol for Recruiting Brokers” after it acquires Merrill Lynch, according to Bruce Kelly of Investment News.
Merrill Lynch was one of the creators of the protocol, which requires participating firms to refrain from taking legal action against departing brokers who leave to work for another participating firm and take limited client personal information with them. The nation’s largest retail brokerage firms have adopted the protocol, and it appears to have reduced costly legal disputes when brokers leave for a competing firm.
Bank of America was not a party to the protocol, and the retention bonus plan rolled by Bank of America and Merrill last month sparked fears that brokers would be subject to lawsuits and restraining orders if they moved to a competitor after signing the retention agreement.
Recruiters agree that Bank of America’s move will make Merrill’s brokers less anxious. As New Jersey recruiter Mindy Diamond, said, “It will give a lot of Merrill advisors comfort,” particularly if Merrill’s storied culture erodes under the new ownership by a commercial bank. The protocol has been described as an “escape hatch’ for disgruntled brokers.
This action may also protect clients whose brokerage accounts would otherwise get caught in up in such lawsuits.
While Bank of America’s decision to abide by the protocol may make it easier for Merrill brokers to leave , such brokers should still consult with legal counsel if they are considering making such a move.
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