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NEW YORK, US - BANK of America reached out to Merrill Lynch's 15,500 financial advisers, offering retention packages to the group which the bank has described as Merrill's 'crown jewel'.
The top producing advisers bringing in US$1.75 million (S$2.64 million) and up in fees and commissions will receive a loan up front equivalent to those fees and commissions and the company will pay down the loan for them over a seven-year period, said a source at Merrill Lynch familiar with the offer.
Top executives of Bank of America and Merrill confirmed in statements that the offers had been made, although not the amounts.
'It is important for clients, shareholders and the future of the combined company to retain top-performing advisers at the two current firms,' said Mr Robert McCann, vice-chairman and president, Global Wealth Management at Merrill Lynch and the man selected to head the combined companies' brokerage division.
'This transition award, which is fully realised over multiple years, will help ensure that clients receive thoughtful advice, guidance and world-class service from the financial advisers they have chosen and trust.'
Those advisers who bring in US$1 million to US$1.75 million will be loaned 75 per cent of that amount up front, with the debt to be extinguished over seven years. They also will receive a loan equivalent to a quarter of their fees and commissions which the bank will pay off over three years only if they meet certain growth targets.
Advisers who bring in US$750,000 to US$999,000 will be offered a 50 per cent 7-year loan and the same 25 per cent three-year loan based on growth targets, with the size of the upfront loan decreasing further for those managing between US$500,000 and US$749,000 and still further for those who deliver below US$500,000, the source said.
One Merrill adviser who asked not to be identified said the offer could go a long way toward calming worries among the investment bank's brokerage that could have seen a defection of top talent.
'We are busy working with our clients,' the adviser said.
'The top end guys we all feel will stay put, but lower end producers may not be thrilled. Are they going to go independent? I doubt it.'
But others were more sceptical about what kind of reception the offers would get.
'These offers aren't going over well at all,' said Mr Howard Diamond, CEO of Diamond Consultants, a New Jersey based financial services recruiter. 'There is a message with the money.'
'Eighty per cent of the Merrill guys we are speaking with are very unhappy with the offer - especially the guys just under a million in production,' he said.
Offers to the international Merrill Lynch advisers have not been finalised, a spokesman said. -- REUTERS
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