Reference no: EM133981624

Problem

However, now, that some time has passed, the economy has recovered (somewhat), and the stock market has bounced back, Merrill Lynch and other financial services companies are making money again. At Merrill Lynch, there is always a lot of action and discussion around compensation strategy. Merrill introduced a plan to expand its number of financial advisors by 8% (about 1,200 people). Where would they come from? Other firms? How would Merrill get them to move? By offering unusually high up-front signing bonuses and decentralizing authority to make such offers. Top brokers from other firms can receive 150% of their pay at the firm they are leaving. Get the instant assignment help. Merrill is not the only firm looking to add top brokers. Indeed, what is described as a "bidding war" has broken out and signing bonuses have been reported to be moving in some cases to three to four times previous pay in some cases. Why the bidding war? "Wealth management firms make the bulk of their profits on the top 10 percent of their producers" according to compensation attorney Katten Muchin. And, very wealthy clients tend to be more loyal to their advisors than to the advisors' firms.