SB Retention

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Jan 28, 2009 11:00 pm

I am guessing

  50% for t12 over 500k 75%  over 750k 100% over 1mill   Based on 2008 T12. FA's under contract will have balance not forgiven deducted from new bonus before paid. Could be something like 25% from 300 - 500
Jan 28, 2009 11:10 pm

I’ve heard they’re aiming to replicate the Merrill model.  If that happens, <500k won’t be getting anything, along with anyone still under contract.

Jan 28, 2009 11:17 pm

i think they may have learned from the outcry of merrill’s deal. merrill’s hemorraged advisors and assets since the deal.

  they'll throw a bone to the bread and butter brokers...
Jan 28, 2009 11:35 pm

Senior management of these consolidated firms will make a run at using political capital to snuff out the retention and alter the compensation of big firm advisors - and talent will migrate. The advisors who handheld clients for the actions of greedy bankers will be steamrolled. Meanwhile, their “leadership” has torched the industry and left advisors scrambling for a decent firm to serve their clients. What firm is the fairest of them all?    

Jan 28, 2009 11:38 pm

Wells is paying 100% upfront. Come on over

Jan 29, 2009 12:18 am

"along with anyone still under contract. "

  I have heard more than you  
Jan 29, 2009 10:08 am

SB/MS retention will be out within a few weeks… much faster than Wells/Wachovia.

I agree, < $500k will get no love. Combined they’ve got some 20k FAs… the new firm needs 15k max. They’ll continue to pick up bigger producers and shed most under $500k. That’s going to be a net 5-7k FAs at both firms out the door. 

It’s not that the guy doing $400k does not make money or is inexpensive to replace, it’s the fact that the business and marketplace has shifted and will continue to favor bigger players only within the wirehouse model. 

If you think we get loads of recruiter calls now in this industry, wait a few years. UBS, SB, MS and ML have literally gutted their farm system and bench. Doing that actually for 10 years in fact is what created the crazy recruiting deals of the present day. Deals may  drop back in 09’ as the business continues to contract, but 2-4 years from now when 30% of the big FAs are at or very close to retirement in the wirehouses and the lack of developing FAs catches up in full, the musical chairs game will be played to tunes by bands like Husker Du!!! (umlauts omitted).   There… I just dated myself! :

Jan 29, 2009 10:23 am

you have the deal info?

Jan 29, 2009 10:34 am

No, don’t have the deal info, but I’m hearing the same from folks in management on both sides about $500k producers, tighter, leaner, and 15k being the target and goal of the retention package. Word is it will be very on par with the ML deal. Unlike that though, I don’t see firms like UBS putting the super sized meal deal out there this time around. That could really undermine retention IF it is similar to ML’s deal.

Jan 29, 2009 11:08 am

Wells deal info?

Jan 29, 2009 1:21 pm

do you think that MS SB JV will consider producers under 500k who are also under 7 years of LOS? If there is someone there 4 or 5 years and doing 300 or 400k, do you think they will get anything? Have any of the other firms looked at a LOS model for retention bonuses?

Jan 29, 2009 5:24 pm

The deal will cover producers at 400 and above. 99% of those covered under the Partners program (loan based on LOS bonus) will have a retention package I am told.

  Others on this forum are merely repeating what they have read in initial news stories and those comments were simply opinions from recruiting firms.   I can assure you my information is from a good source, although NOTHING is finalized yet.   People under contract will have a retention package, but it will be reduced by the amount you still owe on your deal which in some cases will reduce it to -zero-.   I wish others here would quit using conjecture, My information is from the source, not some news article that was written a month ago.
Jan 29, 2009 9:08 pm

have you heard enough from your source that gives you confidence to comment on:

    400 to 500      25% upfront   500 to 750      50% upfront   750 to 1.25     75% upfront   1.25    and up  100%   all 7 to 9 yr forgivables
Jan 29, 2009 9:34 pm

That looks like it could be accurate.

Jan 30, 2009 1:55 am

I wonder what they will do with the headcount issue. When MS unloaded a bunch of people in 05, they said if less than 225k and 8 years or more LOS they got the hook. I imagine it will be a higher production number (300 maybe?)and a lower LOS number(6)…any body got a feel for where that may land?

Jan 30, 2009 7:43 am

It’s obvious that all these firms are making things up as they go along.  Every time our new president opens his mouth about the outrageous bonuses on Wall Street, it makes me wonder why any firm would want to play Whack-a-Mole by paying another billion or two in bonuses to guys who made a lot of money last year.

We’ll see.  It makes for great Kubuki theater, all the guys who willingly toil away at 40% payouts waiting around for a big check because of merger talks in New York.  It’s just me, but I’ve never understood the economics of a retention package.  If the advisors weren’t going to take a check to move their business to UBS or Wachovia before, what makes anyone believe they will now that they don’t have to worry about C’s headlines anymore?

Jan 30, 2009 8:48 am

Nobody from of any relevance at SB would move to Wachovia. C’s headlines were not any worse than BAC MER UBS or even MS.

Retention packages make all kinds of sense especially when you are paying (MS paying C) for the same business. When it's all over it's like MS transitioned 8000 or so brokers for half of theri current deal. If a retention package is not available, brokers are going to move just to repair their net worth and then blame the move on the former BD. Nobody at SB has anything to look forward to staying without a retention package the stock is worthless and in all likelyhood the deferred comp will be paid out. Many will and are leaving. And the bottom line is the deal is a forgivable loan and spread over 7 to 9 years. Not close to the 18 billion in cash bonuses to top exec's that the press is complaining about.
Jan 30, 2009 10:53 am

Whether you care to call it a “forgivable loan” or a bonus, it’s a bonus.  That’s why you’re paying taxes on it.   It’s a big payment to keep people in their chairs for another few years.  I know how they justify it on Wall Street.   But I also know how the headlines will play out.   And if I’m dumb enough to know, so does Morgan Stanley.

Jan 30, 2009 11:36 am

I did 270k in 08 after 3 years. No senior partner. Club member FA. Right out of training program. Ranked 1 or 2 in country for the past 3 years each month. Do you think I have any shot at a bonus or should I just give up that dream.

Jan 30, 2009 11:41 am

Are you still in the FAA program?  I think for you guys, you’re on a different contract completely.  But as far as what MS will offer, nobody has any idea.

By the way, I was in class 06-01.