Since the middle of March, Smith Barney has lost at least 650 of its approximately 14,000 financial advisors, according to Discovery Database, an industry research firm. The reasons for the Smith Barney departures have been many. First, advisors producing less than $400,000 per year received a pay cut this year and were not offered the same type of retention package that Smith Barney offered to its higher-producing brokers, according to a Wall Street Journal article dated June 15, 2009 by Annie Gasparro and Brett Philbin. Another reason for the departures is that brokers are unwilling to endure the uncertainty of the new Smith Barney joint venture with Morgan Stanley. Still other advisors left in favor of new positions with competitors who offered signing bonuses. Alois Pirker, a brokerage analyst with AITE Group, a research firm, is quoted in the Journal article as citing “possible power struggles, a change in products and potential over wrap,” which “opened the door for breaking away.” Many anticipate that additional Smith Barney brokers will leave as the dust starts settling from the Morgan Stanley/Smith Barney joint venture.
Coming in a close second to Smith Barney in total departures was Merrill Lynch. Roughly 400 advisors have left Merrill in the turmoil associated with Bank of America’s acquisition of the firm. Meanwhile, Wells Fargo, which includes former Wachovia Securities brokers, has lost only 250 advisors. This relatively low number probably results from the fact there will be fewer integration issues and less uncertainty associated with the Wells Fargo-Wachovia combination. As Pirker said, “it’s business as usual for them.”
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