JP Morgan’s chief may have asked rival firms to back off from hiring Bear Stearns advisors, but that doesn’t mean competitors have stopped offering recruiting deals to anxious Bear reps.
Recruiters say Jamie Dimon’s plea with executives from Morgan Stanley and other brokerages has been heard, but firms will continue to recruit. “Firms can recruit as much as they want, but Jamie Dimon has simply asked them not to hire any Bear employee until he’s had a chance to put out a retention package,” says Rick Peterson, president of Rick Peterson & Associates, a Houston-based industry recruiting firm. In fact, while some Bear advisors have accepted deals from rivals, no Bear rep has actually made the move yet, Peterson says.
Last week, before Dimon’s plea, Morgan hired 12 Bear Stearns employees with a total of $26.5 million in revenue. With money literally flowing out the door, a retention package is expected this week. “I think [Dimon’s] got no choice but to get something out really fast,” Peterson says. One Bear advisor says he and his team are staying put until they learn what J.P. Morgan is going to offer them to stay. “We have yet to decide what we’ll do, but we’re anxiously waiting,” he says.
Culture Clash?
Industry consultants say Bear advisors will have a tough time adjusting to J.P. Morgan’s bank culture. “Bear’s advisors are seasoned, independent and powerful producers who run their business like its their own,” says Andre Cappon, founding partner of The CBM Group, a New York City-based management-consulting firm specializing in the financial-services industry.
J.P. Morgan doesn’t have a home for that kind of Bear Stearns culture, Cappon says. “J.P. Morgan is not a retail-brokerage firm. It will be interesting to see where Dimon will house them. If he can give them the same hands-off comfort they are used to then [Bear reps] will probably stay. It will be important for them to know that they won’t be Merrill-ized,” he adds.
Peterson says the Bear advisors are in search of a firm that can offer the best platform. “This is not about a retention package. This is about preserving clients and putting them into the right platform. The bulk of Bear brokers are so professional and extremely sophisticated that I don’t think the size of the retention package, or recruiting deal, will be an incentive or disincentive. The firms that will get Bear reps will be those who can successfully point out their sophisticated offerings,” he says.
But that’s not keeping rivals from offering over 200 percent of trailing 12-months production for some Bear advisors. More telling, perhaps, is that investment banks like Lehman Brothers and Credit Suisse are even offering large sign-on bonuses to Bear advisors, according to one recruiter. “The fact that they’re offering deals is a huge deal. They usually don’t offer anything upfront,” the recruiter says.