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."
