Merrill Offers Top Dollar to Top-Tier Financial Advisors Willing to Make a Move

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Merrill Lynch has begun offering top-performing financial advisors larger incentives to make a move and bring their business with them—a development that showcases the ease of transferring assets within the financial advice space, a recruiter says.

Bank of America's Merrill Lynch has launched a more aggressive recruiting campaign for top-tier brokers, including a bonus paid for transferring client assets after six months at the firm, two sources familiar with the new plan told Reuters.

“Historically this has been the way to hire people,” in the brokerage space, recruiter Richard Lipstein of Boyden Global Executive Search tells eFinancialCareers. “There’s been no other way of getting people to go from one firm to another,” he says.

In private banking and wealth management, moneys are nowhere near so “fungible,” he says, given that assets have often been invested in trusts, valuable artwork, complex mortgages and jet leases, and generally private bankers are forced to leave things in the hands of product experts at their old firms.

Moreover, Lipstein says, because there was no real overlap between Bank of America’s business and Merrill’s when the two companies were combined, BofA didn’t have the cost issues of a Morgan Stanley Smith Barney—which was combining two brokerages—so “Merrill is able to focus more on building the revenue than cutting costs,” the recruiter observes.

"Ours has largely been a ‘grow your own’ talent strategy, but we have and continue to be a competitive, but highly selective, recruiter of top industry talent," said Merrill spokesman Matt Card, without commenting on incentive compensation details.

Merrill Lynch had reportedly told managers to offer brokers from UBS, Morgan Stanley Smith Barney, Wells Fargo and other firms an upfront cash payment equal to 150 percent of the fees and commissions they generated during the prior 12 months, according to Reuters. The offer is said to be limited to advisers whose performance put them in the top 40 percent of their peers.

Merrill previously offered brokers 140 percent up front, said one recruiter who was briefed on the changes. The higher offer lets Merrill catch up with bonuses offered at rivals UBS and Morgan Stanley in a market environment where it's difficult to generate growth organically, Reuters reported, adding the following details:

  • Merrill also will pay an additional 25 percent bonus after six months if brokers transfer 65 percent of the assets they oversaw at their former employer.
  • These brokers also can receive a 50 percent bonus -- half cash, half stock -- after the first year of the deal if they attract 75 percent of their client assets.
  • These payments combined mean some brokers can take home two times their trailing-year revenue in cash after just one year, one of the most aggressive packages offered by Merrill, a veteran recruiter said.
  • The offer is part of a nine-year commitment, which lets brokers earn additional "back end" payments based on meeting revenue and asset-growth goals.

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