Reps: PruCovia Stay Packages Too Skimpy

But given the soft market, reps are likely to stay put even if management doesn't sweeten the pot.

As details of retention packages emerged in the wake of the Feb. 17 announcement that Wachovia and Prudential Financial would combine brokerage operations, Pru advisors interviewed by Registered Rep. expressed dismay and, occasionally, outrage at the size of the deal. Reps are being offered from 10 percent to 30 percent of trailing 12-month production, to be paid out over a period of several years.

However, industry insiders say there's not much likelihood that the package will be sweetened, because of the lousy market environment. That has left some bitter feelings among brokers. “You bring us in, and use our numbers to look good to go public and sell the firm, and get us to bring our assets over here, and now we're not getting anything,” says one broker on the West Coast who had been at Pru for two years.

What could result is a significant number of the 4,000 Prudential producers leaving to go to other firms before the Wachovia-Prudential deal is completed and market conditions improve. Already, UBS PaineWebber has picked off several branch managers in both the Northeast and Midwest, and it's expected that brokers could follow, to UBS or other firms. The broker exodus could begin soon — Prudential's deferred compensation plan, called MasterShare, vests April 10, and some high-end producers say they're waiting for that before jumping ship.

“The regional vice-president was answering questions for an hour, and the roof was caving in on him from all directions,” says one Pru advisor. “The consensus I'm getting is the same — everybody is extremely disappointed and very upset, and PaineWebber is canvassing our office heavily.”

Retention bonuses at the lower end, for an advisor with production of $300,000 in trailing 12-month commissions, would receive a 10 percent bonus, spread out over five years (which translates to $6,000 a year). Those with less than $300,000 don't get anything.

Clearly, Wachovia wants to keep the top producers. Producers with a $1.2 million trailing production will get a 30 percent payout, and Pru brokers say there are rumors that the deals for these top producers may be sweetened.

Recruiters point out that despite the retention bonus, which vests at a rate of 20 percent annually over five years, many Pru reps don't have great options in this market, and getting a bonus for doing nothing isn't so painful. “A number of people keep saying, ‘It's just the first offer,’ and they're waiting for it to be made better,” says New York-based recruiter Mark Elzweig. “I don't see why it would be, though.”

Other recruiters and compensation experts advise Pru brokers to be happy with what they get, because they are unlikely to increase their income this year anywhere. “Why would you want to take an already extremely bad situation and make it worse?” wonders one industry consultant. “The likelihood of one doing better this year than last year is not good, and last year was terrible.”

Still, the Pru brokers are hoping for something better, perhaps getting the money over fewer years. Meanwhile, the structure of the new company is becoming clearer. The new regional management team, as laid out by the two firms in an internal memo, is comprised largely of Prudential managers, many of whom report to eastern division director Scott Umstead, of Pru. The western division reports to Terry Chase, who was from Wachovia. Of the 13 regional directors, nine come from Prudential. Three Pru managing directors were let go, however.

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