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More On Merrill--"Retention Package Is A Joke"

Tuesday, 28 Oct 2008 | 2:45 PM ET

Not all the emails I received about some Merrill Lynch financial advisors feeling "insulted"--according to a recruiting firm--were full of anger at the Merrill employees. Some were quite supportive.

Mitch S. issues a warning (see the part in yesterday's post about the Protocol for Broker Recruitment): "As a former Merrill guy--now at Smith Barney (a million dollar producer)--I warn Merrill advisors to be careful if trying to leave. I fought and won an arbitration after my manager went after me and lied and forged documents to try and smear me."

"Anonymous" claims to be a financial advisor for 15 years (I have no confirmation of his numbers here, so if you know better, let me know):

"Bank of America's Ken Lewis has just committed the biggest blunder since Wachovia's Ken Thompson purchased Golden West. Ken Lewis doesn't have the slightest understanding of brokerage business, and, to be honest, there are not a lot of bankers who do...they believe the businesses are very similar. However, later they figure out the only similarity is that both handle money. The businesses are entirely different. First, banking is, for the most part, a commodity business, meaning that people generally choose their mortgage provider based upon the rate offered as well as who they buy a CD from. It comes down to price...but with a full-service brokerage it isn't about price. It is about value added business. Clients will move or stay based upon the quality and trustworthiness of the advice received...

"Merrill Lynch's retention package is a JOKE, when compared to what is available on the street today. I mean, before we go there, let's consider what Merrill Lynch is CURRENTLY offering itself to lure advisors from other firms. Drum roll please: OVER 300% of trailing 12-months. WHY would they flirt with the competition and offer drastically higher packages to join their firm than they offer to their OWN bread and butter?...NO ONE will work for them. I mean if people in the industry liked the firm, it would not take a lot to attract them. I remember A.G. Edwards never paid to have an advisor join them, and Raymond James doesn't offer near what Morgan Stanley , Wachovia or Merrill Lynch has to to attract talented advisors. Remember those other firms (A.G. Edwards prior to the Wachovia takeover and now, Raymond James) win consistently the J.D. Power awards for the Best Full Service Brokerage Firm from both their clients and advisors...

"Additionally, Mr. Lewis needs to understand the sorry state of Merrill Lynch would be far worse if it wasn't for the efforts and relationship of the advisor and client. The Merrill Lynch name does not mean anything anymore. Rather, it has actually been quite costly to the advisors. Advisors have a central question to overcome: How can a firm that could not handle its own financial affairs help me with my own? Advisors are the ones who answer those questions, not John Thain..

"Advisors have the relationship with the client. It is not the firm and the firms know this. It is no secret that the firms which put the client first, the advisor second, and the firm and shareholders third are the ones that win the awards for being the best for clients and listed as the top places to work for in America."

And from a "Merrill Advisor", more numbers I cannot confirm:

"Only about half the Merrill Lynch advisors received anything. About 2,500 advisors produce $1 million or more. This is not a WALL STREET but a Main Street (issue), since the majority of advisors do not live in New York... Anyone producing under $500k and in the 4th or 5th quintile for peer group were offered nothing. Meaning, if one was a LONG TIME Merrill Lynch advisor--15 years--they were offered NOTHING. These are people making up to $200k a year working for the company 25 years but offered nothing if their annualized production as of Sept 12th was in 4th or 5th quintile and under $500k. So short-term Financial Advisors, with the company just a couple of years who were given all their assets, but who are in top 2 quintiles in production, were given packages but twenty year veterans where not.

"A million dollar producer was given $750k up front, but a $600k producer was given $150k. Is the million dollar producer worth 5 TIMES the $600k producer?

"The Growth component is based on year over year growth for Calendar year 2008. (Most assets just went down 30% in last month but the annuitized business payout is based on 3rd quarter until end of this year, meaning everyone's annuitized business starting in 2009 is down at LEAST 30%). So, in essence, the 25% growth awards...most likely NEVER BE paid...

"This is the creme de la creme: EVERYONE who accepts their transition program agreement has to agree to WAIVE his/her right to receive benefits under the "CHANGE IN CONTROL" provisions in all our deferred comp plans. Needless to say people have up to "hundreds of thousands" in these plans...SO you could offer a $600k producer &150k over 7 years. Terminate them for UNDERPERFORMANCE as defined under the "Good Reason" provision, NOT PAY him/her the hundreds of thousands he/she has in FACAAP growth awards, etc., because they signed away their rights on the retention package."

Questions? Comments? Funny Stories? Email funnybusiness@cnbc.com

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  • Based in Los Angeles, Jane Wells is a CNBC business news reporter and also writes the Funny Business blog for CNBC.com.

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