UBS did it, and now Wells Fargo has changed its broker retirement program, increasing the payout to a retiring broker and to the broker who gets his accounts. Wells Fargo says that under its new program, retiring advisers can receive a payout of up to 225% of their 12-month trailing production. The number varies in part based on the valuation of the book agreed upon by the retiring and inheriting advisers.
Wells Fargo is also offering a loyalty award equal to 25% of the retiring adviser's T-12.
The inheriting advisor, meanwhile, gets a payment of up to 100% of the retiree’s T-12 which helps offset the cost of the acquired book, according to Wells Fargo. The payment, in the latter instance, comes in two installments, one at the departing adviser's retirement day and a second three years later, according to the firm.
The program comes with a non-solicit agreement for the retiring broker, which some in the industry press are criticizing. While non-solicit and non-compete agreements often harm the employee and restrict his ability to work, the non-solicit is completely appropriate in this situation, as Wells Fargo is paying the retiring broker for those very clients. Leaving the ability to accept the payment, and then attempt to solicit the client to leave the the firm, would have Wells Fargo paying significant sums of money for nothing.
By the way, UBS' retirement program has a higher payout.
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Mark Astarita represents financial professionals in their employment, regulation and compliance matters and has done so for over 30 years. For a review of your transition agreement, or your firm's retirement program or for more information call Mark at 212-509-6544 or send an email to mja@sallahlaw.com
