(Bloomberg) -- UBS Group AG is withdrawing from an industrypact designed to allow financial advisers to change companies withoutbeing sued by former employers, further destabilizing the accordafter Morgan Stanley’s October exit.

The Zurich-based firm will no longer adhere to the Protocol forBroker Recruiting as of Dec. 1, according to an internalmemo from Tom Naratil, president of wealth managementAmericas. On Wall Street reported the decision earlier Monday.

“Our operating model is more focused on retaining our existingadvisers than recruiting to grow our business,” Naratil saidin the memo. “Our top priority is helping you reach your fullpotential, not recruiting advisers from our competitors.”

Morgan Stanley’s departure from the pact sparked concerns in theindustry over further defections. The agreement, signed in 2004,was designed to mitigate lawsuits when advisers left to join acompetitor. Almost 1,700 firms have signed the protocol.

Gamesmanship, loopholes

New York-based Morgan Stanley said the agreement was no longersustainable and had become “replete with opportunities forgamesmanship and loopholes.” Competitors employed tactics such asjoining the pact to lure advisers, only to then drop out of theagreement, the firm said.

Withdrawing might make it harder for the companies to recruitadvisers in the future, said Bill Willis, head of recruiter WillisConsulting. If other big players such as Bank of America Corp.’sMerrill Lynch, Wells Fargo & Co. or Ameriprise Financial Inc.join UBS and Morgan Stanley in leaving the pact, then it starts tobecome a meaningless accord, he said.

“I wouldn’t be surprised to see the other major firms follow,”he said.

Not all companies are eager to leave. Raymond James FinancialInc. Chief Executive Officer Paul Reilly said this month, soonafter Morgan Stanley announced its plans, that he would stay in theaccord even if it ends up being “the last firm standing.”

Recruiting of advisers at some of the major banks has declined.UBS said last year that it would cut back on the number of advisersit wooed from competitors, and would spend less money on thoseefforts.

Rivals including Morgan Stanley followed with similarinitiatives. And more brokers are also turning toward beingindependent or registered investment advisers, which could posemore of a threat to banks, said Frank LaRosa, CEO of EliteConsulting Partners.

Those changes came after the Department of Labor announced itsnew fiduciary rule, which was designed to eliminate some conflictsof interest from people who oversaw retirement accounts.

The regulation, created under then-President Barack Obama, hasbeen in a state of flux since Donald Trump was elected.

Copyright 2018 Bloomberg. All rightsreserved. This material may not be published, broadcast, rewritten,or redistributed.