Morgan Stanley plans to offer its top-producing financial advisors and those at Citi's Smith Barney unit as much as 105 per cent of their annual production to stay with the two firms as they create a joint venture, according to Dow Jones.

The retention deal was announced to branch managers at both firms a few hours after rival

US banking group Wells Fargo said it will not be handing out retention bonuses to the Wachovia Securities brokerage force.

A Morgan Stanley spokesman confirmed the details of the package but declined to comment further.

The package is in the form of a nine-year forgivable loan, and brokers will not receive the money until January 2010. The delay isn't typical for retention packages, but the firms want to ensure that the money is coming from future earnings from the planned Morgan Stanley Smith Barney joint venture and not from taxpayer money the firms received from the Troubled Asset Relief Programme.

The firms expect the deal on the joint venture, which will have roughly 20,000 brokers, to close in June.

The package is on a sliding scale and ranges from offering brokers with $500,000-$749,999 in production 30 per cent of their production in cash.

Brokers with $750, 000-$999,999 are eligible to receive 50 per cent of production. Those with $1 million and more will receive 75 per cent of their production in cash in January 2010.

The deal also offered deferred compensation that will be paid out in January 2012. The $1.75 million and up producers will receive another 30 per cent of production. All other brokers will receive bonuses from 25 per cent to 30 per cent of production if they are able to grow their production by 25 per cent in the next three years.

Meanwhile, Wachovia Securities brokers will receive no retention bonuses from Wells Fargo, according to Investment News.

Wachovia Securities chief executive Danny Ludeman said the deal was off. In addition, he announced that Wachovia Securities of St Louis will be renamed Wells Fargo Advisors, beginning in May.

“With the environment we're in, with all the attention we're under - all the firms are under - and with clients down 20 per cent, 30 per cent and 40 per cent ... a [retention] bonus didn't seem to be the appropriate approach,” a Wachovia Securities spokesman was quoted as saying.