With Bear Stearns, Lehman Brothers and other firms gone, and Merrill Lynch acquired by Bank of America (BoA), there's a mad dash under way by many of the remaining big-name firms to scoop up the brokers who used to work at BS, LB and ML. Brokers deemed worthy are being offered cash bonuses of as much as twice their annual pay to change firms, according to Darin Manis, CEO of RJ & Makay, a recruiting firm.

Guess who pays?

Some of the hottest action is at Merrill Lynch. BoA is reportedly paying huge retention bonuses to Merrill brokers who generate $2 million or more from fees and commissions so the advisers won't quit. Meanwhile, Smith Barney, Morgan Stanley and UBS are offering Merrill brokers 200 percent or more of their pay to switch firms, according to Manis.

Think I'm exaggerating? A November 2008 survey conducted by Fidelity Investments and National Financial found that one in three of the nation's brokers have been offered a bonus to switch firms. Another 27 percent say they expected to be offered an incentive to switch within the next month.

Brokerage firms are willing to pay these huge signing bonuses because they expect their recruits to bring clients with them -- along with the revenue they generate. Indeed, the brokers surveyed said they expect 60 percent of their clients, on average, to follow them to their new firm.

When a sports team gives a large signing bonus to a star player, the team expects the guy to perform. Likewise, a brokerage firm expects a recruited broker to bring his old clients along and to generate new commissions from those clients -- which means selling a lot of new investment products to them. If your broker switches firms, you need to ask two questions: Why is the broker leaving, and what's in it for me?

Ideally, the new firm will offer services and pricing not currently available to you. But if the broker merely wants you to justify his fat signing bonus, watch out. Continued...