Deals & People February 23, 2009

PRP Designation Wins Smith Barney Backing

Smith Barney has added the PLANSPONSOR Retirement Professional (PRP) designation to the list of the firm's approved designations for financial advisers.
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Offered through the PLANSPONSOR Institute, which is affiliated with PLANSPONSOR magazine, the PRP is the second designation focused on qualified retirement plans that Smith Barney has approved. The PRP designation is targeted to advisers who have a minimum of five years of direct retirement plan experience.

According to an announcement, Smith Barney is committed to supporting financial advisers who service the retirement plan market segment, understanding that in today’s environment, plan sponsors need guidance and solutions delivered by advisers who focus on this market.

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The approval of the PRP designation reflects the intense focus on retirement services at Smith Barney, according to the firm. Smith Barney has a business unit entitled “Retirement Solutions,’ which supports financial advisers with the resources needed to consult on personal as well as business retirement solutions (see “Smith Barney Reorganizes Retirement Group“).

Deals & People February 23, 2009

Morgan Stanley to Reward Top Producers

Morgan Stanley plans to shell out as much as $3 billion to keep Morgan Stanley and Smith Barney brokers aboard the joint venture, according to news reports.
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The announcement, made to brokers Friday, came the same day Wachovia Securities announced it was not offering retention bonuses for brokers to stay on at Wells Fargo Advisors (see “No Dough for Wachovia Reps’).

While the terms of the deal have not yet been finalized, Morgan Stanley agreed last month to a majority stake in a joint venture with Citigroup’s Smith Barney, under the name of Morgan Stanley Smith Barney (see “Morgan Stanley Smith Barney is Born’ and “Advisers Anticipate Their Future at MSSB’).

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Morgan Stanley is planning to offer retention payments to top-producing brokers who are joining Morgan Stanley Smith Barney. Not all of the brokers are expected to receive payments, according to the Wall Street Journal. A broker who brings in $1 million in revenues last year can expect to receive $500,000 to $1 million, depending upon future revenue. Merrill Lynch structured its retention bonus similarly last fall (see “BoA, Merrill Retention Package Rewards Top Producers“).

Reports said the package is in the form of a nine-year forgivable loan, with the first payment to be awarded upfront in 2010 and the second installment in 2012. The Wall Street Journal noted that the payments are coming under criticism because Citigroup received TARP funding from taxpayers—the delay in payments could be an effort to ward off that criticism.

Breakdown

According to news reports, the retention package consists of the following:

  • Brokers producing $1.75 million or more will receive a 75% upfront payment in 2010 and 30% guaranteed on the back end in 2012.
  • Brokers producing $1.5 million to $1.74 million will receive 75% upfront and 30% on the back-end. The back-end payment is subject to an increase in revenue by 25% from year-end 2008 to year-end 2011.
  • Brokers producing $1 million to $1.49 million will receive 75% upfront and 25% on the back end, subject to the same growth stipulations.
  • Brokers producing $750,000 to $999,999 will receive 50% upfront and 25% on the back end, subject to growth.
  • Brokers producing $500,000 to $749,999 will receive 30% upfront and 30% on the back end, subject to the growth requirements.
  • Brokers with industry length of service of two to five years, producing $250,000 to $499,000, will receive from 10% to 20% on the front end and 25% on the back end, with the back-end portion contingent on growth.
  • Brokers with six years of service doing $300,000 to $499,999 in gross sales, and brokers with seven years of service producing $350,000 to $499,999, will get 10% on the front end and 25% on the back end. The back-end payment is subject to increasing revenue by 25%.


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