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Bonds News

U.S. brokerage firms sweeten recruitment deals

* Merrill Lynch raises upfront cash-sources

* Morgan Stanley extending deals to more brokers

* Merrill Lynch hires Morgan Stanley manager

NEW YORK, May 19 (Reuters) - Merrill Lynch BAC.N and Morgan Stanley Smith Barney MS.N have raised the value of their recruitment packages to attract more brokers at a time when fewer are motivated to change jobs, sources familiar with the hiring practices said on Wednesday.

Bank of America Corp’s Merrill has increased its upfront cash payment to a maximum 150 percent of a broker’s revenue from the prior 12 months, up from 120 percent, two sources with knowledge of the terms said.

Morgan Stanley Smith Barney, a brokerage joint venture between Morgan Stanley and Citigroup C.N, is offering 50 to 60 percent up front of brokers' trailing 12-month production to less productive brokers in the third and fourth quintiles, according to the sources, who requested anonymity because they were not authorized to speak publicly about the terms.

Morgan Stanley has generally been interested in brokers from the top two quintiles on a system that ranks brokers by fee and commission production and time in service.

Morgan Stanley spokeswoman Christine Pollack declined to comment on the company’s recruiting practices, but said, “We continue to monitor the marketplace and provide competitive deals to quality financial advisers.”

Merrill Lynch spokeswoman Selena Morris also declined to comment on details of the company’s packages, but said, “We are always interested in hiring quality advisers with industry designations.”

Rick Peterson, a Houston-based recruiter, said companies have become more flexible with recruitment packages.

Many advisers are tied to companies by retention packages that were offered to top producers to hold onto them as brokerages merged during the financial crisis. In general, these retention packages were structured to require repayment of a portion of the package if a broker left the company.

For example, Morgan Stanley and Merrill Lynch had offered brokers producing at least $500,000 annually in fees and commissions bonuses that were structured as loans forgiven over a number of years.

Peterson said recruitment deals had to be more attractive now because some brokers had to repay portions of retention packages after changing jobs.

“Firms are looking at their recruiting goals for the year and realizing they’re way behind,” Peterson said.

Morgan Stanley Smith Barney has lost several managers to Merrill Lynch and other regional and national companies. This week, Michael Simonds, an 18-year veteran based in New York, left the company for a job at Merrill Lynch, two sources familiar with the move said on Wednesday.

Simonds had supervised a complex of 150 advisors with $12 billion in assets under management. Morgan Stanley confirmed that he had left, but Merrill Lynch declined to comment.

Jimmy Tighe, who was head of Morgan Stanley Smith Barney’s New York metro region, joined Merrill in February. (Reporting by Helen Kearney)

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