Just as it looked like temporary restraining orders were becoming a thing of the past, wirehouses have been heading to court rooms across the country with the goal to counter mounting competitive pressure from a surging movement toward independence.
As part of a renewed focus on retention, three of the big four have filed a wave of TRO requests against defectors. In one of the most high-profile cases, Merrill Lynch tried (so far unsuccessfully) to impede a landmark defection by an Atlanta team managing $129 billion.
Two recent UBS cases went the other way. Billion-dollar teams joining Elevation Point and RBC each agreed to client-solicitation bans. Morgan Stanley also appeared in court with an unsuccessful TRO bid in August against a team managing $672 million.
Although firms have had mixed success in the short term, they are hoping to impede moves and distract defectors in the key moments after a departure.
This strategy reflects a two-pronged approach for wirehouses. Firms are attempting to make their platforms more appealing by polishing compensation plans for 2026 while simultaneously locking the back door to make it harder for advisors to leave.
The good news is that as independent firms have grown, so too has their ability to help advisors fight these short-term legal battles. Everyone is afraid of the wirehouse legal teams, but the defense teams can be just as formidable. Whether you are an independent RIA or joining a supported independence platform, firms like Goldman Sachs, Fidelity, Schwab and Pershing are defending advisors with their own high-powered legal team.
The $129-billion defection, which had support and backing from Schwab and Dynasty, shows that not only do independent advisors have access to the same legal resources but also have financial support and backing to fight aggressively.
Leaning on their vast legal budgets is a desperate effort from the big firms to compete on the merits with the flexibility, autonomy and economics being offered by independence. Wirehouses are reaching back into their toolbox to find other ways to tighten their grip on their captive sales forces. Notably, Wells Fargo, the one firm that has its own independent channel, has not been a major player in this round of cases.
Advisors have realized they can receive the same level of research and support for around 10% of their revenue, versus roughly 50% taken out at a wirehouse. Custodians like Goldman Sachs Advisor Solutions provide access to all of the Wall Street-level resources required to serve the most sophisticated clients while allowing advisors to maintain full control and ownership.
That’s why teams like the $1.2 billion Keaton & Sams Group are fleeing even Raymond James for greater opportunity. This is a secular movement that cannot be slowed by manufactured legal hurdles.
Still, with the rising threat of litigation and steady erosion of the Protocol for Broker Recruiting, advisors are rightly concerned about increased risk. Advisors must conduct meticulous due diligence to minimize potential exposure. That’s why it is so important to work with a consultant who can give guidance on best practices when moving.
Advisors in general haven’t made a move in 10 years, and some have never moved. Most of the mistakes are easily avoidable with the right counsel. For example, firms will deploy their full surveillance tools to build a case, and it’s key to avoid these pitfalls.
TRO complaints have cited print logs, emails, camera footage of advisors carrying out boxes and cell phone activity to try to conjure up suspicion that client data had been removed.
“Being an advisor myself for so many years and consulting so many teams, I understand how to help advisors avoid the easy pitfalls,” said Roger Gershman, Chief Executive Officer of The Gershman Group.
Ultimately, TROs may delay a move, but they rarely derail it. Clients are loyal to their advisors, not a company logo. The legal battles can be costly and distracting but are usually more speedbumps and roadblocks.
As the Editor of The Gershman Group, a boutique financial services consulting firm, TGG brings expertise in financial analysis, strategic planning, and market research. With a keen eye for detail and a passion for helping businesses navigate complex financial landscapes, TGG delivers insightful, high-quality content to empower informed decisions. Backed by years of industry experience, TGG makes complex topics accessible through clear and compelling communication, shaping the firm’s thought leadership and commitment to excellence in financial services.
