Lavish trips to award top-performing financial advisers all but disappeared with the financial crisis. Now big brokerages are remaking them in a way that's unlikely to rile Main Street.
Wells Fargo Advisors and Merrill Lynch are sending top-performing advisers on training trips to major universities, like Harvard, New York University, the University of Chicago, University of California-Berkeley and Tulane. Morgan Stanley Smith Barney and UBS Wealth Management Americas are also offering training-focused adviser trips.
Recognition trips were long a staple of the brokerage industry, with top-producing advisers and their spouses getting sent to golfing meccas, white-sand beaches and other luxurious and exotic resort locations. Sure, there would typically be classes in the morning, but a good chunk of time was typically spent on the fairways and greens, in the spa and at the restaurant or Tiki bar.
When the crisis hit the markets in 2008, the public became enraged when some financial firms continued the junkets, including an infamous $440,000 spa retreat by American International Group Inc. executives soon after the company got billions in federal bailout money.
Now it looks like the key for brokerages is finding a way to keep things mostly serious, while also giving enough perks to persuade advisers to put their practice on hold for a few days.
Wells Fargo's new Higher Education Conferences, which begin next month, are being officially labeled educational trips. They won't include company-sponsored golf or spa outings, said David Kowach, Wells Fargo Advisors' director of business development. Instead, advisers will attend lectures on broad themes like the economic markets and current political issues, as well as classes on brokerage-specific topics and programs at Wells Fargo.
Wells Fargo has just over 15,000 advisers, and about 2,100 of them got an invite to this year's round of trips, the company said. Invitees have production of at least $350,000 and reached various best-practice goals set by the company, like creating life-goal plans with their clients. Wells, which declined to comment on the cost of the program, said most of the advisers have been given the option of bringing their spouse or partner.
Merrill's trips (it calls them Elite Performance Forums) run throughout the year and are held at other locations in addition to universities. The Bank of America Corp. unit said it invites top performers, but it would not say what constitutes top performance. Spouses aren't included in the programs, which usually last two or three days and include courses on investment management theory and building winning teams.
At Morgan Stanley Smith Barney, trips are being held in U.S. hotels that are located in cities that benefit from local tourism and convention business. These events have are "built heavily around professional development," and include nice dinners but no big-name entertainment, a spokeswoman said.
A UBS spokeswoman said the company's recognition trips are still suspended, however, financial advisers are being offered the opportunity to "attend business events with robust content intended to educate and grow their businesses." These events are happening in places like Georgia and Florida, and no spouses are invited. UBS isn't paying for social or leisure activities on the trips.
Some advisers interviewed by Dow Jones Newswires had a tepid response to these more serious incarnations of recognition trips, but a couple of Wells Fargo advisers said they're happy to see the return of such perks.
An East Coast-based Wells Fargo adviser, who is planning to take his wife to a New York conference this fall, said he likes the noncompetitive environment at the gatherings. The adviser, who asked that his name not be used, wouldn't want to share ideas with a Wells adviser a few towns over, but at these conferences he can have useful interactions with advisers from other parts of the country.
But the excursions can still look bad, he said. "These trips, while they're highly valuable to the companies in terms of intellectual sharing, the general public doesn't see it that way."
Consumer advocacy groups don't understand the value of these trips, the adviser said, and "only want people to have a ham sandwich over a conference call — and they want you to bring the sandwich."
