Indeed, in 2018 Morgan Stanley and UBS began filing injunctive relief suits against departing brokers trying to move clients (both Morgan Stanley and UBS have kept filing such motions this year).
Now, Papike said, it’s important that advisors look closely at their contracts and perhaps even speak with an attorney before making a move.
“Advisors need to be much more careful,” she said. “It’s uncertain in this new world we’re in. … The first thing someone needs to do when they are considering leaving is know where they are at, know that the firm is part of the broker protocol and know what that means to [the advisor] … ‘What can I take and what can I not take?’ And then understanding their contract.”
Sometimes those contracts may be more difficult to enforce depending on what state you’re in.
“Contracts change over time,” Papike said. “Let’s say you’ve been with a firm for 20 years. The odds are you don’t have a copy of your contract and it’s hard to know how the firm will react if you leave. And asking for a copy of your contract is a red flag, so [that means] being cautious and careful and [knowing] that if you are leaving a firm whether you have some non-compete and can’t solicit.”