SB Retention

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Squizz's picture
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Joined: 2009-01-24

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

Bodysurf's picture
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Joined: 2008-08-02

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.

go_huskies's picture
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Joined: 2008-12-11

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...

LogansRun's picture
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Joined: 2009-01-25

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?    

BE PATIENT's picture
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Joined: 2009-01-16

Wells is paying 100% upfront. Come on over

Squizz's picture
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Joined: 2009-01-24

"along with anyone still under contract. "
 
I have heard more than you
 

burtonfinancial1's picture
Joined: 2008-09-30

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! : http://www.myspace.com/flipyourwig

whalehunter's picture
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Joined: 2005-11-28

you have the deal info?

burtonfinancial1's picture
Joined: 2008-09-30

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.

whalehunter's picture
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Joined: 2005-11-28

Wells deal info?

mysteryman's picture
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Joined: 2009-01-29

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?

Squizz's picture
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Joined: 2009-01-24

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.

g1l1fvp's picture
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Joined: 2009-01-11

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

Squizz's picture
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Joined: 2009-01-24

That looks like it could be accurate.

onthemove's picture
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Joined: 2005-08-07

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?

Bodysurf's picture
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Joined: 2008-08-02

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?

Squizz's picture
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Joined: 2009-01-24

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.

Bodysurf's picture
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Joined: 2008-08-02

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.

mysteryman's picture
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Joined: 2009-01-29

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.

Bodysurf's picture
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Joined: 2008-08-02

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.

mysteryman's picture
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Joined: 2009-01-29

I do still get training bonuses so maybe i will be exempt from the reten bonus just like i am for deffered comp. That would be depressing.

Hank Moody's picture
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Joined: 2008-11-10

mysteryman wrote: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. You're probably the only one worth keeping.

panther11578's picture
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Joined: 2005-08-23

morgan stanley FA. LOS 6. T12= $345k. no partners. 30 years old. any chance at retention or should i try to find another firm?

Squizz's picture
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Joined: 2009-01-24

I would say that if the minimum level for a retention deal is 400k. That nobody below 400k is getting a deal, now matter what age you are.
 
I would bet big money if you are on a training program and have an accelerated payout you will not get anything .
 
I would also guess that MS brokers will get less than SB brokers. At least thats what I have heard.
 
Keep in mind any of this can change, but they will announce the deal by Feb 20th I am told.

uptick09's picture
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Joined: 2009-01-30

So do you think that someone who is LOS4 and still an FAA (part of the training program because training program is technically 5 yrs) who has T12 of 760K would not get anything because he is still an FAA and part of the training program?
 
Thanks,

Squizz's picture
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Joined: 2009-01-24

Tick...
I have no idea. Interesting question. They may handle it the same way they are considering contract peeps. Meaning a deduction of anything thats over the normal grid.
 
I could be wrong on that tho. Grats on doing so well...impressive.

Bodysurf's picture
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Joined: 2008-08-02

I'm going to be the resident contrarian, and suggest that there might not be a retention package at all.Every day MS can put off offering a deal, virtually everyone's T12 goes down, considering what the production was firmwide  going into the third and fourth quarters.  That alone is inducement to wait, especially when you consider that the deal isn't supposed to be consummated until later in the summer anyhow.Couple that with the new rhetoric coming out of Washington WRT Wall Street bonuses . . .

Squizz's picture
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Joined: 2009-01-24

You're wrong Body.
 
There will be a retention it will be based on 2008 gross or the T12 which ever works best for the broker. And retention packages have little to do with the bonus structures that the press is complaining about.
 
Neither Morgan Stanley or Smith Barney have received any tarp money. Citigroup has but none of it went to SB. MS got money from Mitsuibishi.
 
My information is good info from good sources, not some lame opinion on news that doesn't apply.

fritz's picture
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Joined: 2006-01-12

Squizz wrote:You're wrong Body.
 
There will be a retention it will be based on 2008 gross or the T12 which ever works best for the broker. And retention packages have little to do with the bonus structures that the press is complaining about.
 
Neither Morgan Stanley or Smith Barney have received any tarp money. Citigroup has but none of it went to SB. MS got money from Mitsuibishi.
 
My information is good info from good sources, not some lame opinion on news that doesn't apply.
 
MS has received TARP Money.  And that Mits Money was 100% backed by treasury, so in essense the got Govt assitance their also, Mits said without govt guarantee they would not have given the 2nd part of the money. 

fritz's picture
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The Top 20 TARP Recipients
(1) Citigroup  $45 billion
(2) AIG $40 billion
(3) Wells Fargo  $25 billion
(4) Bank of America  $25 billion
(5) JPMorgan Chase  $25 billion
(6) Goldman Sachs  $10 billion
(7) Morgan Stanley  $10 billion
I know people choose to ignore all common sense and facts on these retention sites...

Squizz's picture
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Joined: 2009-01-24

Yep...you're right my bad.
 
Point is the retention package is in the works. It will be reported by Feb 20th and the numbers will be very close to what I am reporting here.
 
 

fritz's picture
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Joined: 2006-01-12

Squizz wrote:Yep...you're right my bad.
 
Point is the retention package is in the works. It will be reported by Feb 20th and the numbers will be very close to what I am reporting here.
 
 
 
Agree its coming, it's already gone too far to turn back and their intent the whole time was to pay retention. Email went out couple weeks ago saying SB/MS would be treated equally though; I would assume both places get exact same deal unless something changed, would assume the numbers 400k and up are right, if anything maybe they would bump up the low to 500K IMO.

Swordoftruth's picture
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Joined: 2008-12-15

It's interesting to watch you guys squawking about retention.

I guess big producers don't like financial risk or fear any more than smaller producers.

Squizz's picture
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Joined: 2009-01-24

Oh I am not squawking...I am hopeful that it happens.
 
I also understand things can change very fast. Kind of like "C" stock disappearing over a couple of months. I also understand that the stock price won't come back to anywhere near it's former value. No way are financial institutions going to be able to use the leverage they once used. Earnings will never be what they once were.
 
I am hoping to get a little repair done in my net worth so I can survive the downturn in our business that will probably continue for sometime. I have been fortunate to be an above average producer. I think most that were doing less than 600k in 2007 will not be in this business in 2010. I hope I am wrong.
 
I am more concerned about clients and how all of this has affected them. I don't care what anyone says here, your client accounts are down significantly and so is your book. This is a very strange time, I hope everyone regains the confidence they once had in investing. Right now nothing makes much sense. Good luck everyone.

Sportsfreakbob's picture
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Joined: 2008-08-24

Squizz is dead on. There will be retention, based on 08 t-12, and it will probably be for 400k+ producers

Bodysurf's picture
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Joined: 2008-08-02

I wonder if I'll be able to use these big retention packages to help with my prospecting.

Squizz's picture
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Joined: 2009-01-24

LOL...good thought Body. Most of us need good financial advisors.

wlooney's picture
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Joined: 2006-06-03

MS/SB package to come very soon. SB brokers will have larger pool of money, but only b/c they have more brokers. Bonuses will be equal among all FAs, according to their level of production of course.

burtonfinancial1's picture
Joined: 2008-09-30

Think NONE of the cuts will be amongst the FA ranks???  This could really go into the ongoing "wirehouse squeeze" topic. No doubt the cuts will extend deep into SB as well.

Report: Morgan Stanley planning to cut up to 4 percent of its work force
NEW YORK (AP) -- Morgan Stanley could announce this month that it plans
to cut up to 4 percent of its work force, The Wall Street Journal
reported.

The report, citing anonymous people familiar with the plans, said
the Wall Street firm could cut 1,500 to 1,800 jobs. The reductions
could be announced this month, according to the report posted on the
newspaper's Web site.Morgan Stanley representatives were not immediately available to comment on the report.The
additional cuts come on top of about 7,000 job cuts Morgan Stanley made
in 2008, and amid layoffs across nearly every sector of the economy as
the nation remains stuck in a recession.The Journal noted that
none of the cuts would come in the global wealth management business,
which is getting ready to combine with Citigroup Inc.'s Smith Barney
brokerage unit. In a deal announced last month, Morgan Stanley will own
a 51 percent stake in the venture.Morgan Stanley has about 8,400 brokers.

JamesF's picture
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Joined: 2007-07-05

I bet WFC gets their package out before this one.

BE PATIENT's picture
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Joined: 2009-01-16

Wait a minute, two huge companies merge with many overlapping jobs and therefore a 4% cut is a surprise?

Cowboy93's picture
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JamesF wrote: I bet WFC gets their package out before this one.

I'll take that action. Put me down for MSSB beating WFC to the punch with their package.

fritz's picture
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Joined: 2006-01-12

Cowboy93 wrote: JamesF wrote: I bet WFC gets their package out before this one. I'll take that action. Put me down for MSSB beating WFC to the punch with their package.
 
I Think he was being sarcastic

Bodysurf's picture
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Joined: 2008-08-02

I'm sticking with my original prediction:  no retention package.  

fritz's picture
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Squizz wrote:You're wrong Body.
 
There will be a retention it will be based on 2008 gross or the T12 which ever works best for the broker. And retention packages have little to do with the bonus structures that the press is complaining about.
 
Neither Morgan Stanley or Smith Barney have received any tarp money. Citigroup has but none of it went to SB. MS got money from Mitsuibishi.
 
My information is good info from good sources, not some lame opinion on news that doesn't apply.
 
Heard from Manager at MS that retention is no longer a sure thing, "50/50 at best".  Have you heard the same?  That would be incredible, but he went into long winded explanation about TARP and coming up hiring and up front deals are going to be nearly extinct from MS.
He pretty much said brokers are going to have very little leverage.

Squizz's picture
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Joined: 2009-01-24

Nope,
I was in a conference call today and the head of MS and Charlie Johnston both said the retention award will happen and details will be announced a few days after the 13th of Feb.
Brokers Award will be based on 2008 gross and will be the same for SB and MS brokers.
They said we will definately have a retention award, that it's going to happen and I don't think they would say that if they thought it was going to not happen for any reason.
 
That MS manager should have been on the same call that took place at 4:15 ET
 

fritz's picture
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Joined: 2006-01-12

Squizz wrote:Nope,
I was in a conference call today and the head of MS and Charlie Johnston both said the retention award will happen and details will be announced a few days after the 13th of Feb.
Brokers Award will be based on 2008 gross and will be the same for SB and MS brokers.
They said we will definately have a retention award, that it's going to happen and I don't think they would say that if they thought it was going to not happen for any reason.
 
That MS manager should have been on the same call that took place at 4:15 ET
 
 
his info was yesterday morning and he shared it with about 1/2 the guys.  Ok thanks for the info.

Bodysurf's picture
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Joined: 2008-08-02

Will it be in cash?  Or in stock?  According to our new president, you can issue all the stock bonuses you want, as long as you pay back your TARP money before the stock vests.I guess I don't know what the point of the big speech today was, if they're going to let two TARP firms pay billions of dollars in retention bonuses, in cash, to guys who are already pulling in--by definition-- $250,000 minimum in income.  It combines the two things they really hate to see in the headlines:  TARP firms using their funds to buy up other firms, and TARP firms paying enormous cash awards.No dog in the race.  I'm just curious whether anyone saw Obama's speech today besides me.  Doesn't sound like it.

Bodysurf's picture
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Joined: 2008-08-02

When I was at SB I remember some of the conference calls too.  I remember one where they said Citi's total exposure to subprime was less than two billion dollars.  Later they said that they wouldn't be bailing out the hedge funds, one of which was run by Pandit, just before bailing them out.  On another call they said that they would indemnify buyers of the auction rate securities, before changing their minds, then changing their minds again and paying back half.  On another still they said that they would under no circumstances be cutting their dividend, two days before announced a cut to the 2008 dividend.  On another call they said they would absolutely not bring the SIV assets back onto Citi's balance sheet; a week later they brought billions of dollars of SIV's back on.  Why anyone takes Citi's or SB's word for anything after the debacles of the past year is a mystery to me, but the one thing that doesn't lie is the stock price.  Down 94% in a year.When you have a big check in hand, that would be news indeed.  But considering that most of what you hear on SB conference call is a negative indicator of what's to come, I wouldn't be looking at new houses over the weekend.

DixieDog's picture
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Joined: 2009-01-12

BodySurf, I agree with your posts.  SB guys, I'm rooting for you, but if the politicians start to get word of big fat retention checks, there could be trouble.
 You know, with all firms under pressure, if you were management, you have to start making calculations about how many guys would actually leave vs. the crap your gonna take for paying out "bonuses" with tarp money.  I say that because John Q. Public and the politicians don't know or care about the difference between "bonus" and "retention bonus".

Squizz's picture
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Joined: 2009-01-24

Body,
I am sorry but you really have no idea what you are talking about. If you aren't at SB or MS why are you even worried about it? It will be cash and forgivable loans probably tied to a 7 or 9 year agreement.
The bottom line is any bank or broker dealer can buy another but if the brokers defect to another firm and take their books what are they really buying?
All I have been doing is passing on information. If you guys don't like it or agree with it I could give a crap.
If it happens great...thats what I am being told. I think it will happen. If it doesn't thats ok too, it just means that I will move at some point in the future.
ML and other firms are blowing up their training departments, the have deemed it's too expensive to train someone that most likely won't make it in the business. The top producers will always get recruited. Most just produce too much revenue not to have value.
 
 So time will tell, I am guessing the retention awards will be exactly what we are being told.

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