UBS is doing all it can to hold onto as many of the advisors at newly acquired Cleveland-based McDonald Investments as possible—beginning with a retention package that will be hard to refuse.
Registered Rep. has 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.
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.”
On Wednesday, 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, according to a press release. (Click here to read more about the deal)
It’s the second brokerage firm UBS has picked up this year. The firm closed the deal on Piper Jaffray’s financial advisor business—worth $500 million—just a few weeks ago. As of the close of that deal, UBS had retained 85 percent of Piper's 840 advisors. Under the terms of the Piper Jaffray retention package, brokers generating annual commissions and fees of over $1 million will receive 70 percent bonuses if they stay with the firm for five years, or a maximum of $750,000, while those producing around $200,000 receive about 10 percent. (For more on the UBS deal with Piper Jaffray, click here)
“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.
UBS could not be reached at press time.
