New rules will require brokers to disclose signing bonuses
Traders work on the floor of the New York Stock Exchange on October 23, 2013 in New York City.
How much money does a top-notch stockbroker get to jump ship from one fancy wealth-management firm to another? If you're one of those broker's clients, you may be on the verge of finding out.
The Financial Industry Regulatory Authority has approved a rule that would require stockbrokers to disclose to their clients what are called "signing bonuses." These are cash payouts, loans, and long-term incentives that brokerages offer the hottest financial advisers to poach them from competitors, and bring their richest clients along with them. Firms like Merrill Lynch, Wells Fargo, and Morgan Stanley all offer compensation that can go into the low millions.
Such a rule would require approval from the Securities and Exchange Commission.
Huge bonuses don't look good from a public relations standpoint. But regulators worry these cash incentives might encourage excessive or risky trading to boost brokers' numbers and make them look like stars.
Top brokers may try to move before the rules go into effect. Some of them consider this an invasion of their privacy.