Weeks after overhauling its recruiting deals in light of new regulatory guidance on the fiduciary rule, Morgan Stanley is again tweaking its transition package for elite brokers.
The wirehouse is sweetening the deal for advisers in the top quintile, offering up to 175% of a broker's 12-month trailing production to move, according to two people familiar with the matter.
Plus, advisers with $450M in combined AUM join Benjamin Edwards.
The deal consists of only upfront awards, in order to be in compliance with recent guidance from the Department of Labor.
The department recently warned that back-end compensation typically included in wirehouse recruiting deals could create potential conflicts of interest under the fiduciary rule, which goes into effect next April. The additional regulatory guidance set off a wave of reactions across the industry, and firms have been reevaluating how they structure their recruiting deals.
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A federal judge categorically rejects claims by an insurance group that the agency overreached. The ruling "sets the tone" for other suits nationwide, an investor advocate says.
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"There are ways to potentially be cute with it. You could potentially cut out retirement business from the back-end bonuses," says an ex-Merrill Lynch executive who works in the independent space. "Cute doesn't usually work when it comes to regulators."
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Unlike its rival, Morgan will keep commission-based retirement accounts under the new regulation's best interest contract exemption.
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Among the wirehouses, UBS has also decided to cut back-end comp from recruiting deals, according to a person familiar with the matter.
Merrill Lynch and Wells Fargo declined to comment on their strategies.
As part of its most recent changes, Morgan Stanley will also pick up all deferred compensation for elite advisers, said a person familiar with the matter but who asked not to be identified.
"The step was taken to remain competitive but still be compliant in the event that the DoL rule does go into effect," the person said.
Some industry insiders and observers anticipate the incoming Trump administration will move to prevent the fiduciary rule from going into effect. President-elect Donald Trump will
