Outsized Recruitment Deals Are Liable to Fade Away
by: Mickey Wasserman Wednesday, February 26, 2014

published in onwallstreet

The question isn’t whether or not FINRA and the SEC will require financial advisors to disclose the details of their compensation packages when they switch firms. The big question isn’t, “What will my clients think if they know how much money I’m earning to move my book of business?” Similarly, spending your time wondering what the maximum compensation you can receive as a recruitment bonus -without having to disclose it- is frankly, a waste of time.

Those questions are soon going to be an exercise in futility, as all indications are that the days of enhanced compensation, big bonuses and upfront cash to attract top producers may be going the way of the dinosaurs.
As such, the only question on any FA’s mind should be “When is this coming, and should I make a change now before the big deals dry up?” Because it’s not a question of whether or not the big recruitment deals are going to lose steam, it’s just a matter of how quickly they will begin drying up.
The reasons are varied and go beyond any new disclosure rules, and the wirehouses are publicly speaking up about their difficulties fulfilling the massive compensation packages they guaranteed. Make no mistake, for the past couple of years even the powerhouse firms have faced an uphill battle to keep their extravagant promises. That means that the 300%+ deals (and closer to 400% if deferred comp is matched) days’ are probably numbered. The 150% upfront cash proposals are not likely to survive the change. The days of buying FA’s out of their current contracts are simply no longer feasible.

The major factor that has driven deals up to their current exalted levels is the intense competition for a shrinking talented advisor population. Supply and demand has always ruled. But here’s the spoiler alert: these days it doesn’t look like we are very far off from the major wirehouse firms making a pact of sorts, to cap the recruitment deals. Recruiting has proven to be incredibly expensive for all of the players involved.
The major firms do in fact speak to each other, as evidenced by the Broker Protocol Agreement (2004) designed to stop the legal battles and temporary restraining orders that ensued when brokers jumped to a new firm. Prior to this agreement, the legal bills from all sides were, if you recall, ridiculous.

Although mergers, acquisitions, and the fickle nature of the industry had, at one point led many of the big players to offer attractive retention packages, these days it looks as if those may be going by the wayside as well. Brokerages seem to not only be tired of chasing one another’s top producers, they are tired of having to pay hefty retention fees, and recent statistics show that they aren’t necessary any longer. Turnover is down at all of the wirehouse firms.

At first glance this apathy towards retention and recruitment might look like it would lead to more turnover. Yet, there isn’t likely to be as much incentive to switch firms, if the monetary incentives just don’t exist anymore.
Please understand that recruitment deals will never entirely go away, but it’s today’s top deals that will be challenged. Whether the big deals start to dry up in 2014, or 2015, is anyone’s guess. But rest assured, they are poised to decrease over the coming months and years.
So if you’re an FA looking for a big recruitment bonus, it’s best that you make a move sooner than later. Because things are about to change, and the clock has already started ticking…with big recruitment deals living on borrowed time.

Michael Wasserman & Associates is Ready to Help
“Accept nothing but the best… and you’ll get it!”

Our experienced recruitment team has identified existing and hidden opportunities for thousands of advisors.
We’ll introduce you, guide you, coach you & provide strategies to obtain “out-of-the-box” deals, and then help ease your transition.

All at No Cost, No Obligation and In Complete Confidence. There are Exciting NEW Opportunities to Explore

CALL: Mickey Wasserman 818-889-7804
www.hotbrokerjobs.com

It’s Your Future ~ Let’s Make It Happen

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Jamie Dimon, JPMorgan Chase’s chairman and chief executive officer, may be known as the King of Wall Street, but Here Is the City reports that he had a very human reaction to the next that his company had suffered huge trading losses which could be over $2 billion. According to the Wall Street Journal, on April 30, when Dimon realized that the losses were bigger than expected, the paper says he “barked” at Chief Investment Office staff, saying “I want to see the positions! Now! I want to see everything!” Then, the Journal says, according to insiders, that Dimon “couldn’t breathe.”

Dimon also had trouble sleeping over the next few nights, reportedly getting up early to exercise and battle his anxiety before heading into work early. He acknowledged that he learned a big lesson from this, telling the Journal: “The big lesson I learned: Don’t get complacent despite a successful track record. No one or no unit can get a free pass.”

The New York Post reports that Bruno Iksil, the so-called “London Whale” who caused much of the trading losses, used to have another nickname. He was known as the “Caveman,” the paper reports, for “pursuing trades that rivals sometimes thought were overly aggressive but often led to huge profits.”

Dimon is planning to testify before Congress soon about the trading losses. Reuters says that the Senate Banking Committee has invited him to testify, but that no date has been scheduled yet.

Written by Lisa Swan

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A variety of bank stocks declined in value Friday after J.P. Morgan Chase broke the news that it suffered at least $2 billion in trading losses. Financial Advisor magazine reports that Chase dropped 6.7 percent in value, while Bank of America, Morgan Stanley, and Citigroup all suffered collateral damage of sorts, sinking at least 2.7 percent in value.

In addition, the Standard & Poor 500 went down 0.8 percent, and the Dow Jones Industrial Average sank 0.7 percent Friday. BofA went down 2.7 percent in value Friday, Morgan Stanley 2.8 and Citigroup 3.8 percent.

The news about JP Morgan Chase has struck a nerve in and out of Wall Street“ JPMorgan has held to a higher standard among the banks,” Walter Todd, CIO of  Greenwood Capital, tells the magazine. “If this happens to them, it raises the question, if they have these issues, who else does?” And Ben Bernanke, chairman of the Federal Reserve, said in a speech Friday that “Banks still have more to do to restore their health and adapt to the post-crisis regulatory and economic environment.”

In other news regarding JP Morgan Chase, so far three people have lost their jobs, the Wall Street Journal reports. In addition, the trading losses could end up being as high as $4 million.

Written by Lisa Swan

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What is the world’s financial outlook for 2012?  The Wall Street Journal surveyed some financial experts about the 2012 investing landscape, and what we can expect over the coming year.

The Journal says that most of the people they surveyed “predict a slow slog for stocks.” However, Tobias Levkovich, who serves as Citibank chief U.S. equity strategist, is more bullish on the market, saying that stocks could do surprisingly well. James Paulsen of Wells Capital Management said he expected emerging-market stocks to thrive. And “Buy High, Sell Higher” author Joe Terranova told the paper, “I expect a historic reallocation trade out of safe-haven Treasurys into risk assets” like stocks.

Will this be the year the housing market finally rebounds? Some of the experts the Journal talked to seem to think so. Stocks related to housing have gone up 30% since September, and hedge funds have been snapping up housing stock. However, the Journal says Goldman Sachs “expects a bottom for the market in 2013,” but notes that “these stocks could be strong in 2012, ahead of this change.”

Oil prices, which ended 2012 at $100 a barrel, may drop in 2012, giving consumers “a lift,” the Journal says. Experts also expected natural gas prices to fall. As for Japan, “The yen will weaken significantly,” says Gary Evans, who writes the Global Macro Monitor blog. And finally, there could be a selloff of U.S. Treasury bonds.

Written by Lisa Swan

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A true visionary passed away last week. He seized each moment of every day, and made our world a better place to live in. Please read my collection of his Top Ten quotes. We’ll miss you Steve Jobs!  

“Almost everything–all external expectations, all pride, all fear of embarrassment or failure–these things just fall away in the face of death, leaving only what is truly important. Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose. You are already naked. There is no reason not to follow your heart.” – Stanford Commencement Address 

“Being the richest man in the cemetery doesn’t matter to me … Going to bed at night saying we’ve done something wonderful… that’s what matters to me.” – The Wall Street Journal (Summer 1993). 

 “Your time is limited, so don’t waste it living someone else’s life. Don’t be trapped by dogma – which is living with the results of other people’s thinking. Don’t let the noise of other’s opinions drown out your own inner voice. Most important: have the courage to follow your heart and intuition; they somehow already know what you truly want to become. Everything else is secondary.” – Stanford Commencement Address 

“We don’t get a chance to do that many things, and every one should be really excellent, because this is our life. Life is brief, and then you die, you know? And we’ve all chosen to do this with our lives. So it better be damn good. It better be worth it.” – Fortune

 “I didn’t see it then, but it turned out that getting fired from Apple was the best thing that could have ever happened to me. The heaviness of being successful was replaced by the lightness of being a beginner again, less sure about everything. It freed me to enter one of the most creative periods of my life.” – Stanford Commencement Address 

“Do you want to spend the rest of your life selling sugared water or do you want a chance to change the world?” – (He used this line to lure John Sculley into leaving Pepsi and become Apple’s CEO) 

“Here’s to the crazy ones, the misfits, the rebels, the troublemakers, the round pegs in the square holes… the ones who see things differently — they’re not fond of rules… You can quote them, disagree with them, glorify or vilify them, but the only thing you can’t do is ignore them because they change things… they push the human race forward, and while some may see them as the crazy ones, we see genius, because the ones who are crazy enough to think that they can change the world, are the ones who do.” – Think Different, narrated by Steve Jobs

 “In most people’s vocabularies, design means veneer. It’s interior decorating. It’s the fabric of the curtains of the sofa. But to me, nothing could be further from the meaning of design. Design is the fundamental soul of a human-made creation that ends up expressing itself in successive outer layers of the product or service.” – Fortune

 “Innovation distinguishes between a leader and a follower.”

  “I want to put a ding in the universe”

 Please post a reply letting us know which quote is your favorite.

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Training programs for brokers are falling victim to the corporate budget ax, cutting off a source of new talent for financial firms.

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