Recruiting Update: All Quiet on the Wirehouse Front
The wave of big producers Morgan Stanley and Merrill Lynch were hoping to attract after announcing signing-bonus deadlines last spring has not materialized, according to industry recruiters and reviews of the firms’ hiring announcements.
The wirehouses in May pre-announced plans to curb expensive recruiting packages they have long offered to top advisers in an effort to reduce expenses and work down billions of dollars of broker loans on their balance sheets. Managers and top executives said at the time that they were hoping the announcements would spur deals before the hiring windows closed.
Merrill officials told AdvisorHub that the firm would cut off new offers as of June 1, but honor commitments that its managers made to recruit talent up to that date.
Morgan Stanley Wealth coheads Shelly O’Connor and Andy Saperstein said in a May 23 memo to the “field” that the old-style signing bonuses paying two to three times the revenue produced by a broker in the previous 12 months would apply only to candidates in the negotiating “pipeline” as of June 16 who were prepared to start before September 1.
Based on recruiter observations and announcements from the firms, hires have been minimal.
“Most of the advisors that were going to move moved in by June, and there’s been very little since,” said Michael Wasserman, a Los Angeles-based recruiter who has long worked with Merrill, among other firms. “Nobody is rushing to wirehouses right now.”
“We haven’t had anyone in front of [Morgan Stanley] since they made that announcement,” said Louis Diamond, a recruiter at New Jersey-based Diamond Consultants.
Spokespersons at Merrill and Morgan Stanley did not respond to requests for comment.
The most recent public announcement of hires by Merrill Lynch were teams lured in June from UBS Wealth Management in New York and Chicago with production of $7 million and $10.8 million respectively. The last publicly reported Morgan Stanley hire was the July addition of Boston broker Christine Carona and her team, which produced more than $2 million in the previous 12 months at UBS.
Merrill and Morgan Stanley, which appeared to take their retrenchment lead from UBS’s June 2016 announcement of a 40% recruiting cut, have each announced programs to recruit less experienced brokers to replenish their diminishing salesforces.
Merrill’s Professional Transitional Advisors program, which offers an initial guaranteed salary plus a grid payout, is aimed at brokers with three to eight years of industry experience and mid-size books, and has been the focus of attention for many traditional recruiters.
“It’s putting a lot of advisors into the pipeline” Wasserman said. “For a younger advisor to grow their book, an ideal place today would be Merrill.”
Saperstein and O’Connor told advisors in their memo that Morgan Stanley was focusing resources on hiring new advisors with “digital” technology skills. The firm also has launched a program to recruit former brokers who dropped out of the workforce for personal reasons.
Other outside recruiters said the paucity of conventional hires reflects a diminishment of the big firms’ brand-name value, stepped-up hiring interest from mainstream competitors such as Ameriprise Financial, RBC Wealth Management-US and some independent advisory firms, as well as higher selectivity criteria at the wirehouses.
Some regional competitors, or those with reputations for servicing less wealthy investors, have raised their all-in bonuses to reach the 200-300%-of-trailing-12 levels the wirehouses offer to the strongest brokers.
“Panic subsided and deadlines felt less ominous” when brokers saw those deals, said Jeff Bischoff, a former recruiter for UBS Wealth Management who is now an independent headhunter in Greenwich, Conn.
“Regionals can be more flexible, and there can be more of a homey feel,” said another recruiter who still works with some wirehouses and spoke on condition of anonymity.
Philadelphia-based Janney Montgomery Scott in the past week said it hired brokers from Merrill who were managing $730 million in assets while Dallas-based registered investment advisor Syntal recruited a local Merrill team that it said managed $600 million of customer assets in late August. Morgan Stanley lost a pair of brokers in New York CIty overseeing some $550 million for international clientele last week to an independent broker-dealer.
-Jed Horowitz contributed to this story.