Ameriprise Fattens Recruiting Deal in Employee Channel
Ameriprise Financial is offering top brokers as much as 320% of the commissions and fees they generated over the previous year to join the company, reviving sizzling signing bonuses now abjured by most competitors.
The Minneapolis-based company, hoping to hire brokers with clients wealthier than its traditional middle-class base, told outside recruiters last week to offer its top new deal to brokers who join as full-time employees and are in the upper-fifth of their firms’ production ranks. (More than 75% of the almost 10,000 brokers at Ameriprise are independent contractors.)
The company is offering upfront cash payments of 170% of the fees and commissions brokers produced in the previous 12 months, up from the 150% plan it introduced three years ago. (The payments are tied to promissory notes amortizing over 10 years.)
Signing bonuses can reach 200% if brokers amass 80% of the level of assets they managed at their former firm within six months, or 90% within 12 months. The asset-transfer awards are paid half in promissory notes and half as monthly cash bonuses over nine years.
“The new deal involves meaningful increases for advisors,” said Ameriprise spokeswoman Kathleen McClung.
The fattened offer, which two headhunters said is the highest deal on Wall Street, comes as rivals such as Merrill Lynch, Morgan Stanley and UBS Wealth Americas have slashed recruiting of experienced brokers. They have criticized signing bonuses as expensive exercises in futility. Brokers often leave when their deals expire or lose motivation to produce, executives have said.
Ameriprise, which has indicated that wirehouse brokers are a major target of its upscale ambitions, is also sweetening its offer with “back-end” production bonuses. Brokers can earn another 30% of trailing-12-month production at their former firms if they hit production targets ranging from 70% of their T12 in Year One to 120% in Year 4 at Ameriprise. (The other bogies are 100% of T12 in Year Two and 110% in Year Three.) The awards will be grossed up by 8% to account for interest.
The back-end production bonuses will be paid monthly in cash over six to nine years, the spokeswoman said.
Ameriprise also is offering a 30%-of-T12 deferred compensation award to first-quintile producers (and 25% to 5% for the lower four quintiles) to offset money that brokers may have left behind at their former firm, the spokeswoman said. If every asset and production goal from a top-tier advisor is hit, the deferred award could bring the total recruiting bonus to 350% of T12 revenue at a broker’s former firm.
Lower-level producers also are eligible for the upfront and backend bonuses but at lower levels. Brokers in the second-quintile of their firm’s ranks, for example, can qualify for a 150% upfront cash award and the 30% annual production awards.
Whether Ameriprise has upped its deal out of strength or out of concern that it is missing recruiting goals is being debated by headhunters and rival firm recruiters.
The company ended its first quarter on March 31 with 2,176 employee advisors, up a net 179 from a year earlier. (Its count of independent brokers in its so-called franchise channel, which generates lower margin for the company, rose a net 34 to 7,705 brokers.)
“Advisors who compare us with other firms are often impressed by our capabilities and support,” McClung said in an e-mailed statement. “We consistently evaluate our transition package to ensure it remains a compelling and competitive offering for top talent.”