Over the weekend, the Wall Street Journal reported that some firms have been dropping brokerage fees to keep departing advisors' clients. This is nothing new: Back in the day, firms would offer free trades (and other incentives) to clients in an effort to keep them from leaving along with the broker. In some cases firms are waving tens of thousands of dollars by not charging clients fees for as long as two years.
There has been quite a lot of movement of late (more to come? See our e-newsletter, The Next Move), as we here at Registered Rep. have been reporting over the last several months. In our June isse due to be posted on June 5 or so, Staff Writer Halah Touryalai notes that most of the movement (about 5,600 reps have switched b/ds since last Novemember) has been between rival wirehouse firms --- as opposed to going independent. So, it does not surprise us that firms would get aggressive on offering discounts. They quite frankly have to.
But, we wonder, as news of this gets around, is this a precedent that could come back to haunt? One Morgan Stanley Smith Barney advisor who we know wonders, "Is this a dangerous thing? Sounds great at first, but it's gonna piss off some [clients] when they find out about it."