(Bloomberg News) Sallie Krawcheck, head of Bank of America Corp.'s wealth management division, told Merrill Lynch financial advisors that a new "garden leave" policy doesn't apply to them, said two people with knowledge of the matter.
Concern had spread among some of Merrill Lynch's 15,500 advisors that they would face curbs like those imposed by the bank's U.S. Trust unit, said the people. The policy bans associates who leave from soliciting the firm's clients for eight months, starting with a two-month garden leave. The term refers to workers who are ordered to stay home after they give notice, leaving them little to do other than gardening.
"Contrary to press and recruiter speculation, there are no changes coming from Merrill Lynch Financial Advisors on any type of garden leave," Krawcheck wrote in a February 25 memo, according to the people, who asked not to be identified because the matter isn't public. "Please put that one in the circular file."
Bank of America, seeking to stem defections and protect client accounts, asked U.S. Trust employees to sign agreements last month extending notice periods to 60 days from as little as two weeks, according to a copy of the document. The advisors face legal action if they approach the Charlotte, N.C.-based firm's clients during the two-month garden leave, and for six months after they move on.
The bank also told U.S. Trust workers that they weren't covered by the so-called broker protocol, a voluntary recruiting agreement that allows advisors to solicit clients after changing employers without getting sued. Merrill Lynch, a co-creator of the protocol, is still subject to the agreement.
The U.S. Trust unit is a private bank catering to wealthy clients, with about 4,000 employees. Workers received the garden leave notice ahead of 2010 bonus payments and were told their continued employment hinged on agreeing to the new policy.
"She wants to make it completely clear to Merrill Lynch advisors that she wasn't talking about them" regarding the U.S. Trust resignation policy, said Richard Lipstein, a managing director at headhunter Boyden Global Executive Search Ltd. "You want to keep as many of your people happy as possible."
Krawcheck's message to Merrill Lynch advisors came at the end of an e-mail entitled "Notes from the Road," part of a series of letters typically detailing how clients are responding to the firm's strategies. Registered Rep, an industry trade journal, reported on the e-mail this week.