In an effort to remain competitive in the recruiting arena, Merrill Lynch will now be offering packages to brokers from other firms that can amount to as much as 200% of an advisor's trailing 12-month production, according to a recent Merrill recruiting summary document that On Wall Street has obtained.

The wirehouse bumped up the guidelines on its new deals ahead of the summer, a time when many advisors in the industry prepare to bolt. To cash in on the new transition bonuses, brokers must bring over an exceptional amount of their old assets and continue producing at a high level.

"If someone comes over and [his] business grows, this could be an enormous deal," says recruiter Bill Willis, a former Merrill manager who now owns Willis Consulting in Palos Verdes Estates, Calif.

According to the 11-page summary, Merrill managers can now offer upfront payments of as much as 140% of an advisor's prior-year production. In the past, Merrill reportedly gave no more than 140% for the front- and back-end bonuses combined.

Only a very small group of advisors will qualify for the maximum package. Those who do must come from the other four wirehouses and rank in their firms' top three production quintiles. That means "140% is not going to be used very often," says Willis.

A Merrill spokeswoman says the company does not comment on questions about compensation.

At least four headhunters with knowledge of the new plan say that in special cases, the firm might reimburse part of a person's deferred compensation at his prior firm. And according to the summary, the new deal is longer than it was before. Now, it locks a person to Merrill for eight years--up from the previous five-year commitment.

Merrill's efforts further support the idea that the Street has become a seller's market for brokers. This is due to the generally favorable U.S. economy, coupled with the consolidation trend in financial services companies. And brokerages' recruiting bonuses continue to break records. Last year, UBS became the first wirehouse to offer a 200% transition deal for advisors who jumped there.

Wirehouse executives are careful not to quote the maximum amounts they are willing to pay for talent. Instead, they say they give managers the flexibility to create arrangements to fit each person.

Nevertheless, the Merrill recruiting summary document refers to specific figures in the "new deal structure." According to the summary, upfront bonuses at Merrill from 2004 to 2006 ranged from 50% to 90%. Back-end incentives could have brought the totals to a maximum of 140%. Earlier this year, however, upfront deals at competing firms reached 120% to 150%. So in an attempt to keep pace with the competition, Merrill's upfronts unofficially crept up to as high as 120%.

Now the firm has officially raised the bar. Going forward, most Merrill recruits will receive combined upfront and back-end bonuses ranging from 100% to 140%, according to the Merrill document. But it also states that "in some cases where [recruits] significantly outperform, the total deal ... could approach 200%."

That will occur when Merrill chooses to pay a person's deferred comp and not deduct that payment from other collective bonuses on the back-end side of the deal. One executive recruiter who requested anonymity claims to have already offered an advisor a deal on behalf of Merrill worth 140% in upfront, plus deferred comp payment. The person's total package could come to more than 200% with the back end, according to this recruiter.

"It's just astonishing," says another recruiter Danny Sarch of the industry-wide trend toward bigger deals. Sarch, who operates Leitner Sarch Consultants in White Plains, N.Y., adds that "firms complain that these deals are not profitable. But I've been hearing that since deals hit 50% upfront 10 years ago."

Theoretically, Merrill's offers could apply to even a $400,000 producer in his third year of business. That's because the firm is focusing on attracting advisors who are at the top of the food chain in their peer classes. "Someone doing $400,000 after three years has a pretty good chance of going to $800,000," says Willis.

As part of the new deal, the advisor has to sign an eight-year forgivable loan note. He must then reach five back-end goal benchmarks during his first five years of employment.

For example, at the end of the first year, if a rep has brought more than 65% of his old client assets or liabilities, Merrill will pay him 165% of his revenues, minus the earlier forgivable loan. (Unlike production, revenues means all fees generated by a client--including fees for which brokers receive reduced or no payout, such as IRA fees.)