Morgan Stanley Smith Barney's battle with Merrill Lynch is heating up as both firms sweeten their recruitment packages, recruiters say.
MSSB has reportedly increased its total package to 330% of an adviser's annual production and is now offering a new retirement plan that allows advisers to leave in three years or less.
Meanwhile, Bank of America's Merrill Lynch unit has pushed up its package to 150% from 120%.
Recruiters say Merrill Lynch will allow brokers in the top 20% to "take home 300% of their fees and commissions."
MSSB, in turn, is trying to combat its rival's recruitment package by offering even more attractive bonuses to lure younger advisers to its sales force.
Scott Smith, a senior analyst with the Boston consulting firm Cerulli Associates, said in a telephone interview Monday that banks like Morgan Stanley Smith Barney are forced to lower their recruiting standards in order to attract the younger, aspiring advisers.
"They have growth potential in their careers," Smith said. "Younger advisers will team up with more experienced ones [that] can grow them into producers," he said.
Since most of these advisers are tied to retention packages, competitors continue to change and add more deals to their packages.
"Of course, they would prefer to fill up their desks with $700,000 producers, but if there are no $700,000 guys around, they'll go to the next best option," Smith said.
Mindy Diamond, the president of Diamond Consultants, a recruiting firm in New Jersey, said that MSSB is sending a message to the industry.
The firm is "offering a transition package deal out there for every quality of adviser at any point of his/her career," Diamond said on Monday in a phone interview.
The financial crisis and the 2009 joint venture between Morgan Stanley and Smith Barney led to a fair amount of cost cutting among top-level financial advisers, according to recruiters.
"When the joint venture happened, they ignored producers under" $500,000 in production, Danny Sarch, the president of Leitner Sarch Consultants, a White Plains, N.Y., recruiting firm, said in a phone interview Monday.
"And now they are offering packages to those doing dramatically less."
Spokeswomen for MSSB and Merrill Lynch declined to comment.
