That agreement seemed to be a welcome solution to the recruiting issues that arise when a large number of retail brokers changed firms, but that soon changed. Wells Fargo put a cap on the upfront loan, which traditionally has been 2-3 times trailing twelve. For some brokers, their upfront loans would be more than $5 million, which is where Wells Fargo set the cap.
That cap then starts to unravel the benefit of entering into the recruiting agreement, because the brokers are not bound to deal with Wells Fargo. Brokers complained, and since firms like Merrill Lynch, Morgan Stanley and UBS do not impose such caps. Credit Suisse brokers were encouraged to discuss relationships with those firms.
Credit Suisse brokers need to keep in mind that they are not locked into any particular deal, even if they go to Wells Fargo. Despite popular opinion, all employment deals, including transition bonuses, upfront loans and hurdles are negotiable, as demonstrated by Wells Fargo decision to modify the upfront cap for brokers who are affected, and sometimes offering $2.5 million in new deferred compensation that vests over four years.
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Reviewing Broker Transition Agreements
Mark Astarita is a nationally known securities lawyer who has represented brokers and advisers in their transitions, loans and compensation issues for decades. He has negotiated deals, settlements and agreements with every major brokerage firm and dozens of regional firms. Mark has also represented brokers in disputes with every firm and does so in an efficient and cost effective manner. Call him for a free telephone consultation, and let’s see how I can help you. 212-509-6544 or email - firstname.lastname@example.org