(Bloomberg) -- Morgan Stanley said it will cut back on using recruitment bonuses to poach established financial advisers after Bank of America Corp. and UBS Group AG signaled similar moves.
The firm will honor existing recruitment deals that are approved by June 16 and include start dates by Sept. 1, according to a Tuesday memo from Shelley O’Connor and Andy Saperstein, the New York-based bank’s co-heads of wealth management. The company is developing new recruiting policies and plans to roll out a suite of digital tools this year to support advisers.
“Going forward, we intend to increase the investments and resources supporting our existing talent and platforms even further and significantly reduce experienced adviser recruiting,” the managers said.
Morgan Stanley and its rivals are attempting discipline after an October Department of Labor briefing on potential conflicts of interest resulted in curtailed bonuses and slowed the movement of brokers between firms. Initially, firms restructured their deals, which had historically awarded new hires as much as 330 percent of their trailing 12-month revenue. Now, companies are looking to ratchet down their fight for talent long term.
Read earlier story: Shrinking bonuses slow brokerages’ revolving door
For years, brokerages derided recruitment deals as a zero-sum game that hurts the industry’s profitability, because major firms mostly traded top brokers among themselves. Still, that didn’t stop companies from recruiting to replenish their ranks when advisers crossed the street. The Wall Street Journal reported earlier Tuesday on Morgan Stanley’s decision.
To contact the reporter on this story: Hugh Son in New York at email@example.com.
To contact the editors responsible for this story: Peter Eichenbaum at firstname.lastname@example.org, David Scheer, Steven Crabill
©2017 Bloomberg L.P.