Bank of America has informed its Merrill Lynch advisors that – unlike their counterparts at U.S. Trust – they will not be asked to sign an agreement and go on reduced-pay “garden leave” if they resign, a company spokesperson confirmed Friday.
This news comes a few weeks after some employees of the Bank of America’s U.S. Trust unit, led by Sallie Krawcheck (left), received notices that they would be asked to sign a deal recognizing that, if they planned to depart, they must remain for 60 days and cannot solicit clients for eight months.
The policies, which a company spokesperson said at the time were not new, needed to be consolidated and expanded to apply to U.S. Trust private-client advisors and others. However, they are not being rolled out to Merrill Lynch financial advisors, the company said Friday.
“U.S. Trust advisors and employees get a salary and bonus and are not paid strictly fees and commissions like brokers,” said Mark Elzweig (right), head of an executive search consultancy in New York, in a phone interview last month, when he explained “I don’t think this will spill over to the Merrill Lynch brokers.”
U.S. Trust associates who choose to resign “may be assigned whatever duties” the firm chooses to decide during the two-month leave. They also will forfeit bonuses and must wait another six months before soliciting former clients or colleagues to join their new venture.
Departing U.S. Trust employees are not subject to the industry's so-called broker protocol, which is a voluntary recruiting agreement that allows departing advisors to solicit clients without getting sued, because U.S. Trust is not a signatory to the arrangement. (Merrill Lynch, however, was one of the original signators.)
“Some wirehouse firms have non-compete clauses,” said Elzweig. “And as brokers depart and others get these accounts, the accounts cannot go anywhere for several years, generally three to five years.”
“These provisions are not new [to the industry],” added Elzweig. “Trade-secret agreements with garden-leave provisions have been around the asset-management industry for a while.”
U.S. Trust has some 2,274 “client-facing” financial professionals vs. 15,498 at Merrill Lynch.
The U.S. Trust advisors manage about $368 billion in assets, as of December 2010, while the Merrill FAs have total AUM of $1.58 trillion. Last year, the U.S. Trust business generated sales of $2.7 billion vs. $13.1 billion for Merrill, according to BofA.
In early March, U.S. Trust said it hired 14 new wealth-management professionals, including six advisors, to add “capabilities for its ultra-high net worth clientele,” the company said in a press release.
The new staff members include:
- Dino Aloisio in Los Angeles, previously with Union Bank;
- John Benun in Century City, Calif., formerly with BNY Mellon Wealth Management;
- Donna Botkin in St. Louis, previously with U.S. Bank Private Client Reserve;
- Tyler Brock in San Francisco, formerly with Presidio Financial Partners and Bernstein Global Wealth Management;
- Warren S. Cohn in Century City, Calif., an ex-BNY Mellon employee;
- John M. Corby in Seattle, previously with Rigel Capital, an institutional investment management firm;
- Jon Hearn in Bellevue, Wash., formerly with an alternative investments firm;
- Mark Kessinger in St. Louis, previously with Northern Trust Company;
- Elizabeth Kurman in Chicago, another ex-Northern Trust employee;
- Teresa Meyer in Portland, Ore., previously with D.A. Davidson & Company, an investment firm;
- Christopher Robinson in Portland, Maine, joining from UBS, where he was a vice president within their Private Wealth Management division;
- Jeff Scofield in Pasadena, Calif., previously a branch manager for Wells Fargo Advisors
- George D. Smith, Jr., in Nashville, earlier with SunTrust Institutional Investment Advisors group; and
- Margaret A. Zywicz in San Francisco, who had worked for the American Heart Association as a director of charitable estate planning.
“The caliber of professionals joining U.S. Trust reflects the growing enthusiasm within the wealth-management industry for U.S. Trust’s team-based approach to client service and satisfaction,” said Keith Banks, president of U.S. Trust, Bank of America Private Wealth Management, in a statement.