Citigroup is latest big firm to dump broker protocol

Another large brokerage has decided to exit the so-called protocol for broker recruiting, with Citigroup Global Markets confirming on Friday that it was leaving the agreement. "Similar to others in the industry, Citi has decided to exit the protocol," wrote spokesman Drew Benson in an email. "This decision allows us to continue to invest in our growing team of award-winning financial advisers." Citigroup has about 1,000 financial advisers in close to 700 branches in the United States for wealth management and banking clients. Citigroup's decision caps a year when the landscape for recruiting brokers was turned upside down. Morgan Stanley said at the end of October it was leaving the agreement, and UBS Wealth Management Americas about a month later said it was following Morgan Stanley's lead. Merrill Lynch earlier this month said it intended to remain in the protocol. Agreed to in 2004, the broker protocol makes it easier for brokers to move to new firms by allowing them to carry a limited amount of client information during the transition. It also cuts down on costly legal fees by limiting lawsuits against brokers when they change firms. (More: Citigroup must pay $11.5 million over garbled stock ratings) Citigroup at the time owned Smith Barney, which was one of the original firms to agree to the protocol. Citigroup later sold Smith Barney to Morgan Stanley during the fallout of the credit crisis, cutting its retail brokerage sales force significantly. Industry website AdvisorHub first reported the news on Friday about Citigroup's decision to exit the protocol.