Golden Handcuffs Weakening For 80% Of Wirehouse Advisors

Thursday, June 09, 2011 06:32
Golden Handcuffs Weakening For 80% Of Wirehouse Advisors

Tags: recruiting

People have been talking for awhile now about how the impact of big retention bonuses is fading out. Now there's some data quantifying the effect on the entire industry.

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The Aite Group conducted a snap survey of 151 wirehouse advisors and confirmed the more anecdotal buzz: two years into the seven-year retention contracts, reps are getting restless.


If anything, the golden handcuffs seem to have had the opposite of the intended effect. Instead of encouraging reps to stay longer, the retention bonus makes them more likely to be thinking about breaking away in the next two years.


A full 45% of the wirehouse advisors not currently bound by the contracts say they're happy where they are and have no intention of leaving.


But 81% of those currently riding out their retention contracts say there's at least a small chance they'll jump in the next 18 to 24 months. 


Since the bonuses usually went to top producers -- in the form of big "loans" that are gradually forgiven the longer a rep stays -- this means that the best talent and biggest books on Wall Street might be increasingly in play.


Many will simply move to other wirehouses, but some will go truly independent, Aite says.


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