WealthManagement Magazine

Merrill Carrot to Advest Reps

Merrill Lynch has proffered retention packages to newly acquired Advest Group's financial advisors, and according to industry observers, the packages are having their desired effect. I think it will do largely what it intends, which is to keep as many of the larger producers as possible, says Mark Elzweig, president of New York-based recruiting firm Mark Elzweig Company. According to published reports,

Merrill Lynch has proffered retention packages to newly acquired Advest Group's financial advisors, and according to industry observers, the packages are having their desired effect.

“I think it will do largely what it intends, which is to keep as many of the larger producers as possible,” says Mark Elzweig, president of New York-based recruiting firm Mark Elzweig Company.

According to published reports, brokers with less than $250,000 in trailing 12-month production will receive a 10 percent bonus; producers between $250,000 and $500,000 will get 25 percent; those between $500,000 and $750,000 will get 35 percent; producers between $750,000 and $1 million will get 40 percent; reps between $1 million and $1.5 million will get 45 percent; and those over $1.5 million will get 50 percent.

Advest reps that accept the deal will receive half their bonus in cash and half in deferred compensation that will vest over a four-year period. If the rep leaves before four years, the cash portion must be returned to Merrill.

“For the guys at the top, 50 percent is very nice,” says Mindy Diamond, a recruiter and founder of Diamond Consultants in Chester, N.J., and a regular Registered Rep. columnist. “In the past, like when RBC Dain Rauscher bought Tucker Anthony, and even the Smith Barney-Legg deal, the best reps got closer to 40 percent.” (Legg reps doing $1 million to $2 million got 40 percent — only those doing more than $2 million got 50 percent in the Smith Barney deal.)

For the guys in the lower reaches, the deal isn't bad, but it isn't great either. “Ten percent might be offensive to some of those sub-$250,000 producers, but inertia will likely keep them on,” says Diamond. Recruiter, Michael King with Michael King Associates in New York, says there are a lot of mid-level Advest reps, with around $400,000 in production, who might not be happy with their cut. Of course, it's better than getting nothing, as did Pru reps with under $300,000 when they were bought by Wachovia.

One Advest manager in a New England branch says he's right in that range — roughly a $400,000 producer — and is generally positive about the move and his 25 percent bonus, but says feelings remain mixed among reps over cultural differences.

“It's very different place, Merrill, but it also clearly has advantages like the platform and the reputation of the brand,” he says. “I've always had to explain what Advest was, what we did.” He also commends Merrill for being honest and upfront about what to expect, and for responding swiftly to reps' questions and concerns.

Merrill won't get all the top Advest reps to come, say recruiters. Indeed, some will opt to retire rather than “sell their soul to the devil,” as one recruiter put it. But many more are likely to join up, like the branch manager from New England: “It's like [Daniel] Sontag [head of Merrill's advisory division] said: ‘You can stay and keep working and have no risk, or you can start all over again.’”

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