ML “Transition†Packages are out
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Can someone clarify the Merrill Lynch retention package. Is the bulk of the money in the form of a forgivable note based on meeting certain GDC requirements each and every year? Be interesting for those who accept the package how GDC production might be affected with the turmoil in the markets we’ve all been experiencing.
It's my understanding some forgivable notes are viewed as IRS Taxable with each year the portfion of the loan is forgiven. Plus, another article I read mentioned certain more restrictive clauses. I'm not sure if this is true or not as I have not seen the actual language of the retention package. It seems based on the articles I've read -- sounds like a lot of "soul selling" to me. Tread carefully!What is GDC? gross production? No annual requirement mentioned…
It’s a 7 year forgiveable loan.
My understanding is all these types of deals work like that…Get the money whole up front and as each portion is forgiven, it is taxable in that year…
Anyway, some other points:
1- They did what the rumors basically said they would…pay the bigger producers real money to stay…While a producer doing north of 1mm can get more leaving, it should be enough to keep them at ML/BAC…
2- They threw a bone to the guys doing under 1mm…so those guys are probably in play…
3- The guys doing 250-500K definitely got screwed, and they are definitely in play too…
I think the deal sucks, but the current environment allows for it…We’ll see what happens over the next 6-12 months, once the merger is completed and the current market environment (hopefully) improves.
I think that brand new rookies got the best retention bonus. I have a feeling a lot of account redistributions are about to happen and maybe a few smaller accounts will stick around.
So a MER FA doing 800K gets a check for 400k. In return he signs an exclusive 7 yr. non-compete keeping his clients there for that duration. Points to ponder:
- From what someone else posted…you cannot pay back your loan or portion after 3 years (when market may be better) to null the non-compete? That is scary if true.
- Will the grid stay the same? Do you trust Ken Lewis to not get that $$ back over 7 years? 60 Minutes comments…
- What will be compliance be like? Now they you’re dealing with a huge bank…“TARP says now” (i.e. Obama, & Pelosi said we can’t do X…)
Tough call in the current environment. The % of these 500M-1MM producers who leave may serve a proxy of what the market will be like for the next 7 years. Why not go Indy and get that 23%-50% bonus each and every year by not selling your book for 25-50% one time?
It seems that BAC is getting a steal. Are they going to save you or your clients from this big bad bear martket?
What do they bring to the client that other shops cannot?
Anyone see the movie “Ghost Rider” with Nicholas Cage? Using that as an analogy, Ken Lewis is the devil and ML brokers are the Ghost Rider. Just sign at the dotted line…
I haven’t seen the actual retention package and I do not think anyone in our office has as the manager was out this past week. Once those come out it could be really ugly.
Could be a very good thing for the newbies, but will lose some good senior guys. I think the days of Mother Merrill are officially over.[quote=bondo]I haven’t seen the actual retention package and I do not think anyone in our office has as the manager was out this past week. Once those come out it could be really ugly.
Could be a very good thing for the newbies, but will lose some good senior guys. I think the days of Mother Merrill are officially over.[/quote]Yeah, you guys are hosed!
[quote=SuperRecruiter] [quote=bondo]I haven’t seen the actual retention package and I do not think anyone in our office has as the manager was out this past week. Once those come out it could be really ugly.
Could be a very good thing for the newbies, but will lose some good senior guys. I think the days of Mother Merrill are officially over.[/quote]Check the first page of this post, I gave a complete breakdown of the retention package.
[/quote] I saw your summary of the compensation. I am referring to the actual contract that spells out all the details such as the non-compete.
It is typical language (from what I hear - I haven’t seen it) that says the clients that you think are yours are in fact theirs and you further agree that if you leave you will never have any contact at all, etc, etc,.
I think this is so funny. Doesn’t anyone get it in the brokerage world anymore?
If you work for a big firm, they own the client and can care less if you stay or go. The only way to truly own your client is to go indy, form your own RIA, clear with schwab etc. Did you see the investment news or reg rep article about the ML team that had about 9Billion in assets and went to pershing last week. Those guys understand it. The rest are just fighting over scraps and will be happy/content with any deal since they have no balls.With regards to the Merrill Lynch Retention, not BAI retention, if your were recently hired by ML or have been there but under a transitional contract, are you still eligible for the retention from Bank of America?
My understanding is if you are still under a contract from coming over from another firm you are not eligible for the retention package.With regards to the Merrill Lynch Retention, not BAI retention, if your were recently hired by ML or have been there but under a transitional contract, are you still eligible for the retention from Bank of America?
I am not a ML broker, but would be curious to know when the "upfront" portion of this deal would be payable?? months?? weeks??
Bonded, not sure if I follow. Are you implying that you would expect the upfront portion to be paid on the first day after the merger is completed??
Maybe I just don’t get it. Should those under $750k be so upset? Most are getting a nice payday to just stay put and do what they have been doing. If there was no acquisition then they would be getting nothing. I’d also be concerned about leaving during this market. Since no portfolio is doing well right now, you might just be giving your clients an excuse to try out another advisor. Additionally, you can be certain that those who receive the distributions will mention that you left because you were offered ONLY a $180k bonus instead of $360k. I’m sure that will make the client’s hearts bleed for you…especially considering how much their portfolios are down <?: prefix = o ns = "urn:schemas-microsoft-com:office:office" />
I wonder how hard and fast they will be on the numbers. I’ve already heard of a number of examples where the trailing twelve was just under $750k or just under $1MM. It must really hurt to be less than $10k away from a hurdle.
[quote=saveteran]I'm an LOS 5 producer at ML and am 1st or 2nd quintile in all areas. This retention package completely ignores the rising stars at ML and has me scratching my head. Why wouldn't they want to make up and comers happy. I'm 90% out the door now and I wanted to stay. BTW, the deals remain as rich as ever for an FA with my metrics. [/quote]
I agree that the deal left out the up and comers. Maybe they thought the deferral donus would have been enough for those who are top quintile but under $500k in production.
[quote=Akkula]I think that brand new rookies got the best retention bonus. <?: prefix = v ns = "urn:schemas-microsoft-com:vml" /> I have a feeling a lot of account redistributions are about to happen and maybe a few smaller accounts will stick around.[/quote]
That’s what I’m hoping for. I can’t wait for my book to grow. Too bad I’m not eligible for the deferral bonus.
--WM
Well, the European package is out for ML brokers. They will receive 9% of 2008’s production, to be paid in 2010, if and only if they bring in $30 mil of net new money and increase their revenues by 15%.