The raucous bidding war for talent has been raging even as the industry reels from the financial crisis, leaving the casual observer to think 2010 should result in a cease fire. But industry insiders say that observer would be wrong. Most see the rising tide of packages continuing this year in spite of the shaky economy even as some warn that this is not a sustainable business model.

Consultant Chip Roame sees wirehouses continuing their aggressive recruiting, paying up-front packages of up to three times trailing-12 month production. "You'll see 200%, 300% for some of the big books of business," he says.

But this lucrative game of musical chairs has its limits even for the most sought-after advisors, say Roame and others. "Each time it gets harder to move, and each time a wirehouse goes away, it limits the advisor's choice further," he says.

Observers say the escalating bonuses also are creating headaches for the industry.

Dennis Zank, head of Raymond James & Associates, the firm's traditional brokerage arm, says continuing to offer lavish packages is folly. "I can assure you at those levels the economics of those deals do not work," Zank says. He notes that a number of aspects of a 300% deal could potentially go wrong and make it unprofitable for the firm. "It's a fairly safe bet over the [hypothetical] nine-year term of that contract, we're going to go through at least another pretty dynamic down cycle. The likelihood of all the stars aligning on some of these big deals, with the advisor significantly growing his asset base, revenue stream, not being subject to a market downturn or a breakup of the team or partnerships, or some health problem coming up-it's not good. There are a million things that go on to make it very problematic to model these things out at 200% and 300%."

Other observers, however, say these deals can work, if done just right. Scott Smith, an analyst at Cerulli Associates, notes that wirehouses are offering deals based on substantial growth trends. For example, an advisor with $300 million in assets under management is likely to have increased that from $100 million over the last four or five years.

Consider this scenario, Smith says. A $1 million producer signs a deal; he gets $2 million as his signing bonus. But the money is not paid out quickly. He will break even by the sixth year. At the end of the seventh or eighth year, that advisor will likely surpass the net revenue to the firm that would have been generated by an advisor producing half as much. "That's the firm's other option, if you will," Smith says. "The high-producing advisor the firm recruited is more likely to boost his book of business than a slower advisor. The deal is based on advisors bringing over most of their book of business-about 80%-and continuing to grow. The seven-to-nine-year range is how long they're booked for."

Nonetheless, the deals are still very expensive, and hefty paychecks in general continue to bring scrutiny in Washington and outrage from the media and the public. Although most of the spotlight has been on investment bankers, big bonuses anywhere on Wall Street could come under intense examination in the boardroom. Indeed Zank says that the industry should work harder on retaining advisors rather than "throwing around big deals."

Roame agrees, saying wirehouses have done a poor job for the last decade by allowing advisors to leave, or tying up the few top earners with golden handcuffs. "They can't keep doing that. John's not profitable until year seven. If he moves again on you in year eight, you've got a loser business."

Still, Roame says that wirehouses can retain their current advisors if they change course now. "It's still their game to lose," he says, noting that the wirehouses have most of the retail investors' assets. "The question for 2010 is, do they lose it? There's new leadership at big shops: Bob McCann at UBS, Sallie Krawcheck at Merrill-they might just do fabulous in 2010."

Still, the question remains: how do the wirehouses keep a restless pack of advisors happy-or at least content-after more than a year of brutal headlines and having to explain endless turmoil to clients?

Roame says wirehouse bosses should rethink the cash spigot. He urged them to take the money that would be spent on rich signing bonuses and instead, do those "things that make an advisor want to be at your company." He suggested several areas for improvement, including better technology, help with succession planning, coaching, marketing brochures and paying for ad campaigns.

He also suggests allowing retiring advisors to monetize their client list by selling it on the free market. This would slow the migration toward independence, Roame says. "Did that guy want to go independent, or did he just want to sell his business? You didn't buy his loyalty, you bought [a warm body] for a few years."