Some employees of the Bank of America’s U.S. Trust unit, led by Sallie Krawcheck (left), received a notice that they would be asked to sign an agreement and go on reduced-pay “garden leave” if they resigned.
The policies appear to be a reaction to the loss of a U.S. Trust advisor, Michael C. Brown, who had nearly $6 billion in assets under management when he departed late in 2010, according to a story reported Friday by Bloomberg and other news services.
Advisors who previously could leave after two-weeks' notice must remain for 60 days and cannot solicit clients for eight months, according to a copy of the document obtained by Bloomberg.
The policies, which a company spokesperson says are not new, have been consolidated and expanded to apply to private-client advisors and others.
“U.S. Trust advisors and employees get a salary and bonus and are not paid strictly fees and commissions like brokers,” said Mark Elzweig, head of an executive search consultancy in New York, in a phone interview with AdvisorOne. “They are paid like [traditional] employees, and the rules are different.”
U.S. Trust associates who choose to resign “may be assigned whatever duties” the firm decides during the two-month leave, according to the Bloomberg report. They also will forfeit bonuses and must wait another six months before soliciting former clients or colleagues to join their new venture.
Departing 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.