Every Day is Friday? Broker Moves Happening All Week in Covid Era - AdvisorHub

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May 19, 2021

by Miriam Rozen

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Another routine that has fallen by the wayside in the remote work era: the longstanding tradition of wirehouse brokers moving firms on a Friday in order to gain more time to contact customers about their move.

In several examples from recent weeks, broker teams have exited Merrill Lynch Wealth Management on a Monday, left Wells Fargo a Tuesday, left Merrill on Wednesday and Thursday, and departed UBS on a Thursday.

“It’s changed for sure,” says Casey Knight, a Houston, Texas-based financial advisor recruiter of the Friday tradition.

Knight and other recruiters blamed Covid-19-related work-from-home conditions that have kept advisors out of the office and given brokers a wider window during which to move and reach out to their customers. Branch managers at the departing firm may have a tougher time distributing accounts and rallying far-flung brokers to contact customers of the existing brokers, they said.

“When advisors make a transition, the word isn’t traveling as fast because nobody’s working in the offices,” Knight said. “Managers may send out a mass email to the defecting brokers’ clients to try and retain them, but they are unlikely going to be able to organize in a few days’ time when most brokers are remote.”

It’s also psychologically easier for brokers working from home to leave any day without the physical connection to their offices and coworkers, according to Jeffrey Bischoff, a South Barrington, Ill.-based recruiter with Old Greenwich Consultants.

“Every day is the same,” Bischoff said. “The day of the week doesn’t matter anymore.”

Brokers are timing moves based on when transition support staff are available to help them at the new firm, the day after deferred compensation vests and other matters of convenience, Bischoff said.

Thursday has become the new Friday in some cases because of pandemic-related delays in regulators’ transferring broker licenses to the new firm, according to other recruiters. The Financial Industry Regulatory Authority, state securities regulators and the Securities and Exchange Commission must all coordinate around license transfers.

“Regulators sometimes have been slower than ever in approving a license transfer,” said Danny Sarch, a recruiter with Leitner Sarch Consultants in White Plains, New York. “Leaving on a Friday makes it risky because if your licenses do not transfer then you can’t contact clients.”

The Friday rule was also a legacy of an age when expectations were that the former firm would seek a temporary restraining order enjoining the defector from taking clients, but TROs have slowed in the age of the Protocol for Broker Recruiting. The pandemic gave brokers additional cover when courts were closed for a period of time due to local stay-at-home orders.

“Back in the days when there were a lot of temporary restraining orders, you would hire someone on a Friday, and it would be hard to get a judge to issue a TRO that day,” said Bill Willis, a recruiter with Willis Consulting in Los Angeles. “That gave the individual, theoretically, Friday, Saturday, Sunday, and Monday to get to be on the phone to clients before they were captured by the TRO. So that’s the tradition of Friday.”

TROs became less common with the 2004 initial signing of the Protocol for Broker Recruiting, by Merrill Lynch, Smith Barney (later acquired by Morgan Stanley) and UBS Financial Services. The pact, which Morgan Stanley also joined in 2006, was aimed at reducing litigation costs created by the battles to prevent brokers from calling their former clients. In 2017, UBS and Morgan Stanley withdrew from the Protocol, but TRO battles have not returned with the same intensity as before the agreement.

To be sure, Friday remains the day of choice for many firm-hopping brokers, especially those who are making non-Protocol moves. For advisors who are already independent and own their books, day-of-the week timing has never been as much a factor, recruiters said.

“We still see the vast majority of our clients resign on a Friday especially in non-Protocol scenarios,” Louis Diamond of Diamond Consultants in Morristown, New Jersey, said.

Diamond and the others also agreed that Fridays are likely to come back into favor once brokers start returning to the office and managers can mount a more coordinated counter-attack.

“Fridays are still best,” Bischoff said. “I tell people, given the choice, go Friday.”

And defecting brokers will continue to like Fridays too, if they follow country music singer legend George Jones’ “It’s Finally Friday” lyrics: “I’m free again.”

-Mason Braswell contributed to this story. 

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