Corporate & Securities Law

As wirehouses fight to keep brokers from moving to the independent channels, warring wirehouses are adding fuel to the fire.  Morgan Stanley Smith Barney LLC and Merrill Lynch are going toe-to-toe by offering top reps a recruiting package of up to 330% of annual production.  Sources have said that those are the highest levels ever.  But be careful.  Attorneys at SNSFE negotiate these deals and these deals are complicated and tied to a rep's ability to increase business. It's impossible to know how much each broker will ultimately receive.  UBS, meanwhile, currently is offering deals in the range of 200% to 220% of trailing 12.  Regarding Merrill's and Morgan Stanley deals, it would take 5 years for the rep to reach the top compensation level, which would be paid out in the form of a forgivable loan over nine years.  In the case of Morgan Stanley Smith Barney, reps need to increase assets and production by 50% over the first five years, with specific growth targets set for each year.  These deals are complicated and risky for reps.  Reps absolutely must seek legal counsel to increase their level of protection in case the deals go south.

Source:  InvestmentNews