Huge signing bonuses–up to 140 per cent of the previous 12 months production–are being offered to new recruits at Bank of America’s Merill Lynch and Morgan Stanley’s Smith Barney. That’s higher than what was seen during the boom years of 2006 and 2007.
Merrill has lost something like 3,000 brokers since the start of the year, when it merged with Bank of America. The so-called “thundering herd” has thinned from 18,000 to 15,000. Some of these have been low producing employees who were “let go.” But the defections have included a large number of top producers.
It still seems that Morgan Stanley is probably the top paying brokerage. Although Merrill is officially matching the 140% of production number, Merrill applies a complex formula of performance targets that may be unrealistically difficult to achieve.
Once the perceived market leader, Merrill did not have to recruit as aggressively. The financial crisis and the merger changed that. Advisory business chiefs Bob McCann and more recently Dan Sontag have left, Mr Sontag after Sallie Krawcheck, former Smith Barney chief, came in above him as head of global wealth and investment management.
“They’re bringing someone in from a firm most of us would never consider going to,” said a veteran Merrill broker. “It’s not the Merrill Lynch it was and never will be. To those of us that lived it, it was Camelot. It’s not any more.”
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