Deal Components
There are a number of deal components that may be important to you. Over the years, we have identified many components that are key to negotiating the right package, some of which are identified below.
- Upfront Bonuses: Based on a percentage of the trailing twelve months’ production (not calendar year).
- Back-end Bonuses: Based on meeting production or asset goals at the end of 12-14 months. Some firms will use 13 or 14 months to accommodate the initial transition process and generally use the best twelve months’ production. Production goals are usually around 75-80% of the “trailing twelve” at time of hire — some firms will offer additional bonuses for exceeding those levels. Asset bonuses at some firms are tied to moving a percentage of the assets the broker had under management at the previous firm; at other firms, these bonuses are based on whatever assets the broker has under management at the end of the period.
- Accelerated Payout: This is an option at some firms. These payouts are often fixed at 50%, but many may be one or two grid levels higher than normal for the production level.
- Salary: This is sometimes offered for the first 2-6 months. This may be part of the total incentive package or, for firms that give no upfront bonus, it may be the entire package.
- Roll-back of Length of Service (LOS): For purposes of enhancing eligibility for clubs, trips, etc. The roll-back is usually limited to one-year (e.g. LOS 5 to LOS 4).
- Deferred Compensation: Most firms do not address this issue separately, but see it as an included part of the incentive package. At least one firm addresses deferred compensation separately on top of the basic deal.
- Supply & Demand: Some firms base managers’ compensation to a great extent on recruiting. If a manager needs one more recruit or “one more in” to get his bonus and it is late in the year, your deal may be sweeter than normal. Conversely, if a manager has a full office and has surpassed his recruiting goal, you may get a rock bottom offer even if you are a great producer.