7 things to know about retention bonuses and why the post-check ether may be wearing off

I talked to a broker who had received a retention bonus yesterday and he told me he invested the bonus near the market lows of 2008/09 and now is in a place to pay back the retention bonus and keep the portfolio profits!

A surprising number of brokers mistakenly view retention bonuses as irrevocable contracts with no escape hatch. The fact is that any broker who accepted a retention bonus can leave at ANY time, as long as the any balance due on the advanced funds is repaid. That can be accomplished either by the advisor returning a portion of the advance that they did not unwisely spend, using some of the transfer bonus paid to them by a new firm, or a combination of the two. This is not to say that every advisor should head for the exits just because they can, but if a compelling opportunity is beckoning from a different firm it can (and probably should be) explored.

Retention checks can be paid by venturing into your own practice as an RIA. Sometimes the numbers make sense and brokers can recoupe in a few years after that it’s all profit.

Well put — the difference between receiving a bouquet of flowers and planting a garden of perennials.