I read the editorial “No reason to keep signing bonuses secret” (Feb. 25), and as I have written before, I don't see any reason to be afraid of disclosure of bonuses.
That said, I disagree with much of the editorial.
First, until someone shows it to me, I haven't seen anything to back up former Securities and Exchange Commission Chairman Mary Schapiro's comments in an open letter to broker-dealer chief executives in 2009 where she implied that transitioning financial advisers have a higher rate of compliance problems than those who haven't moved. If a reasonable person heard the things said by the advisers at the “losing” firm about the departed adviser in an attempt to retain the accounts, he or she (including Ms. Schapiro) would be horrified at the lack of professionalism or even common courtesy shown in the name of competition.
Not all advisers who compete for the business of the recruited adviser play “dirty,” but it happens much more often than an adviser who “churns,” or sells inappropriate investments because of a signing bonus/forgivable loan.
Second, let's be clear: Advisers are still “at-will employees” (in the W-2 model) and have a requirement to stay employed at the recruiting firm for eight or nine years in order to keep the bonus.
Third, “dirty little secret” is just an incorrect and pejorative characterization of bonuses paid. I counsel all advisers with whom we work to disclose their bonuses voluntarily because the fact that they took a bonus will be used against them by advisers at their former firm.
Once they explain to clients their money left behind, the risks entailed in moving, the “downtime” of no income while accounts move and the length of the contract, reasonable clients understand and bless the moves of their advisers, and there is no “secret.”
And calling it “dirty” is just unfair. Bonuses paid are a direct result of the limited and shrinking supply of advisers, combined with a constant and growing demand.
If firms could train advisers who they knew would be stars, they would. If they could hire them without paying bonuses, they would do that, too.
Finally, recruitment bonuses are common in many industries where demand far exceeds supply. Characterizing the bonuses that brokers get as “generous recruitment bonuses that brokers alone reap” is both incorrect and inflammatory, ignoring the specific requirements necessary to keep the bonus and the risks that brokers take when they move a substantive practice from one firm to another.
Leitner Sarch Consultants Ltd.
White Plains, N.Y.
Our office has been following your articles on the recent changes with Social Security, and the blog “Tackling online accounts for Social Security a pain” (Feb. 25) really caught our interest.
Once we learned that the Social Security office was going paperless, we instructed our clients to create accounts through the Social Security website so that they can have access to their estimate of benefits. Multiple clients have been “locked out” or “suspended,” and all but one say that they don't use any sort of identity protection service.
When this happens, the website gives a phone number to call, but when called, the client is instructed to go to their local office. When they go to the local office, they are instructed to call the number they were given.
LPL Financial LLC