Wall Street has been offering sky-high signing bonuses to attract top producers for a long time. Specifically, the wirehouses pay anywhere from 100% to 150% in up-front signing bonuses. Total packages can get to around 300% for top performers in front- and back-end bonuses.
Mark Elzweig, president of executive search firm Mark Elzweig Co., anticipates that the shrinking and aging advisor population is the fundamental driver behind these mega-deals. In particular, Cerulli Associates forecasts that the number of advisors across all channels will fall to 297,515 by the end of 2016, down from 316,109 in 2011. Since advisors are retiring and leaving the business faster than trainees can replace them, Cerulli predicts that advisor headcount at the wirehouses will decline by 2.4% a year as their sales forces either retire or join firms in other retail channels.
In Mr, Elzweig’s view, while wirehouse recruiting packages will remain at their current high levels for the foreseeable future, they have essentially peaked. To ensure that they earn a good return on their enormous recruiting packages, the wirehouses typically require nine- or 10-year commitments through forgivable loan agreements (and other provisions, which our attorneys negotiate on behalf of reps). Some advisors accept less money up front in exchange for shorter contracts. Others seriously consider going independent or moving on to another non-wirehouse channel.
