The wirehouses distributed billions of dollars to advisors in order to keep them from fleeing during the upheavals of 2008-9, but now the clock is ticking down on many of those retention incentives.
As noted recruiter Mindy Diamond notes, the typical retention deal was structured on a seven-year timetable, which means about advisors can keep 30% of that money distributed in early 2009 free and clear.
The rest is typically still considered a "loan" that will gradually be forgiven until the contracts expire in 2016.
Each one-year cliff can mean 10% to 15% of annual production -- a decent amount of money, when you consider that at a 40% payout, many of these advisors would still owe their former bosses around 1.75 years' pay if they leave.
That's still a hardship for advisors who want to jump to an independent model, since the IBDs can maybe provide 25% of production -- 60% of a year's pay on the wirehouse payout -- at the moment.
But a year from now, those same wirehouse reps will have to pay back 42% of production, or a year's pay.
And the year after that, they'll be four years into their retention contract and will owe 80% of a year's pay.
In early 2014, the IBD transition package starts to look bigger. We might see a real running of the bulls then.