Many wirehouse advisors are frustrated with increased bureaucracy and a loss of flexibility. In fact, many say they will leave unless their firms re-up the retention deals. Since it is highly unlikely that the mega firms will offer additional retention incentives, this has caused many advisors to pause and think about the greatly expanded landscape. The all-time high recruiting packages—hovering around 350 percent of an advisor’s trailing 12 months production—are also pretty enticing. Did the retention awards buy loyalty or just time? Has the time come where so little is left to be paid back that if an advisor were to choose to go elsewhere, the ties that bind are just not great enough?
When most of the mega firms were acquired or merged in 2008, those firms wanted to give their advisors a compelling reason to stay. Retention deals were richest for the most productive advisors. When Bank of America purchased Merrill Lynch, the bank offered those generating more than $1.75 million annually a bonus of 75 percent of production forgivable over seven years, plus another 25 percent deferred bonus paid over three years.
