MSSB has reportedly increased its total recruiting package to 330% of an adviser’s annual production and is now offering a new retirement plan where advisers are allowed to leave in three years or less. Meanwhile, Bank of America’s Merrill Lynch unit has pushed up it package to 150% from 120%. Recruiters add that Merrill Lynch will allow brokers in the top 20% to “take home 300% of their fees and commissions.”
On the other hand, MSSB is trying to combat its rival’s recruitment package by offering even more attractive bonuses to lure younger advisers to its salesforce.
Scott Smith, a senior analyst with Boston-based consulting firm Cerulli Associates, said banks like MSSB are forced to lower their recruiting standards in order to attract the younger, aspiring advisers.
“They have growth potential in their careers,” he said. “Younger advisers will team up with more experienced ones [that] can grow them into producers,” he said. Since most of these advisers are currently tied to retention packages, the competitor continues to change and adding more deals to their packages.
“Of course, they would prefer to fill up their desks with $700,000 producers, but if there are no $700,000 guys around, they'll go to the next best option,” Smith said.
Mindy Diamond, president of Diamond Consultants, a recruiting firm based in New Jersey, believes that MSSB is sending a message out to the industry. The firm is “offering a transition package deal out there for every quality of adviser at any point of his/her career,” Diamond said.
In wake of the financial crisis and then the early 2009 joint venture between Morgan Stanley and Smith Barney has led to a fair amount of cost cutting among top-level financial advisers, according to recruiters.
“When the joint venture happened they ignored producers under [$500,000 in production] and now they are offering packages to those doing dramatically less,” said Danny Sarch, president of Leitner Sarch Consultants, a White Plains, N.Y.-based recruiting firm.
Spokeswomen from both MSSB and Merrill Lynch declined to comment.