In just four short years, wirehouses are expecting a bumper crop of retention awards to expire. It’s never too soon to be sure that the soon-to-be advisor free agents feel the tug of devotion — and unpaid deferred compensation.
In 2015, deferred compensation is the new black at the major wirehouses.
Technically speaking, grids were largely left in tact so that firms could claim to have merely altered compensation on the margins. But now comp is inarguably more backloaded, and therefore somewhat less valuable. And that’s not all.
Payout tweaks at major wirehouses are similar in that firms are rewarding the same set of advisor best practices: acquisition of new client relationships, fee-based business and lending and other banking business.
Firms are aware that in the short-term they may lose some advisors. But preparing for January 2019, when the retention awards expire, is their end game. Wirehouses are betting that their bolstered deferred compensation dollars will convince more advisors to stay with the home team. Given the stratospheric levels of upfront bonuses offered by rival firms, it’s hard to see how these new programs will make much of a difference in stemming defections.