UBS is doing all it can to hold onto as many of the newly acquired Cleveland-based McDonald Investments advisors as possible — beginning with a retention package that will be hard to refuse.
Registered Rep. learned from a source familiar with the deal that the Swiss firm will offer McDonald advisors with at least $500,000 in production over the last 12 months a retention package valued at 100 percent of their trailing 12-month production, with 60 percent of that total available immediately. Those reps would also receive immediate stock options. Advisors producing between $300,000 and $400,000 will receive a total package worth 60 percent of their trailing 12-month production; those with less than $200,000 in production will likely receive 10 percent, the source said.
For top McDonald brokers, the offer is far more handsome than the recent industry standard. When UBS acquired Piper Jaffray in the spring of this year, it offered Piper brokers generating $1 million or more just 70 percent — if they stay for five years. (As of the close of the Piper deal in August, UBS had retained 85 percent of Piper's 840 advisors.) That UBS-Piper package was on par with what Merrill Lynch offered to Advest reps last year. Mindy Diamond, founder of Chester, N.J.-based Diamond Consultants, which specializes in retail brokerage and banking recruiting, says it will be hard for McDonald Investment's advisors to turn the offer down. “One hundred percent just to stay in your seat is a great offer.”
UBS announced it would buy the regional firm, KeyCorp's brokerage unit, including 51 branches and some 340 financial advisors, for up to $280 million in early September.
“UBS has a record of being really good to its Piper brokers. So as long as they court [McDonald Investments advisors] by flying out to see them and letting them know that things will stay the same for a period of time, then it will work out here, too,” Diamond says.
