I assume everyone knows how these forgiveable loans work. The firm gives you a multiple of your last year's gross commissions as a loan, and they forgive the loan over a period of years. That period has been 7 to 9 years, firms are starting to ask for 11 years, and now Wells Fargo is looking for 13 years.
That is a long time, and something that brokers need to seriously consider before agreeing. We have all witnessed the problems with these long term notes - managers change, staff gets fired, offices close, desks close, divisions consolidate. There are dozens of things that could go wrong and make a broker's life a disaster in a 7 year relationship, never mind thirteen years.
As I said before, these agreements are negotiable, and need to be reviewed by counsel. Brokers cannot be expected to commit to a thirteen year relationship, which for many means spending the rest of their career with Wells Fargo.
That may not be a bad thing, but what happens when Wells Fargo decides to stop paying on accounts with less than $500,000 in assets? Or it decides to merge with Merrill Lynch? Or it shuts down the office that you work in and changes your commute to 2 hours, or...well, I could go on forever. I have represented brokers in all of these types of scenarios, and the longer the note, the more potential for problems.
Going to another firm is a possible solution, but then there is the arbitration that you will need to file to get your deferred compensation to consider. Odds are you will win that case, but it is a hassle.
Need help? Call our office at 212-509-6544. We represent brokers across the country in transitions, and have dealt with every major firm. Or email me - firstname.lastname@example.org