Morgan Stanley Using Hedge Funds To Keep Talent

It's hard to keep talent around when they can make up to 20% more across the street. Such is the plight of Morgan Stanley, but CEO John Mack has an alternative carrot-and-stick approach, Bloomberg News reports. The investment bank hopes to hold on to its best-paid traders and bankers by giving them access to the firm's hedge funds and leveraged buyout funds, allowing them to squirrel away part of their annual bonuses in the investments. Morgan Stanley isn't very competitive in terms of compensation versus the market, Jason Kennedy of recruiter Kennedy Associates told Bloomberg News. They're doing this to lock in their staff. Morgan will even kick in 200% of the investment in the form of a low-interest, low-risk loan. The catch? If you leave the firm before three years, you lose the whole pot. One more condition that should please those investemployees: They won't have to pay back the loans if the funds they invest in drop so low they would have nothing left after repaying Morgan Stanley.