New Merrill Lynch comp plan rewards teams

Crews that double their revenue over the next five years are now eligible for a new award

Dec 5, 2013 @ 11:52 am

By Trevor Hunnicutt

Financial advisers are used to getting rewarded for being star players, but now Merrill Lynch Wealth Management is rewarding good teamwork.

The largest brokerage by client assets Tuesday introduced an award for teams who double their revenue in the five years after 2013, spokeswoman Susan A. McCabe told InvestmentNews. Those teams will share a payout will equal to 10% of the team's incremental revenue growth.

Teams give clients confidence because they can more seamlessly deal with succession issues and share the responsibilities of serving complex accounts, Ms. McCabe said.

The compensation scheme also includes a new way for advisers 55 and over to retain a two- to four-year consultant's role on their team after they retire. The graying brokerage industry has been searching for ways to improve succession planning.

Advisers will also now see a doubled credit for positive flows on trust fees.

But the new compensation plan leaves the broker's base grids untouched, according to Ms. McCabe.

The Bank of America Corp.-owned brokerage's competitors include Morgan Stanley, Wells Fargo & Co. and UBS AG. UBS unveiled an increased focus on high-net-worth clients in its new compensation program this week.

As the variety of services they provide to wealthy clients has increased, the four major wirehouse brokerages are increasingly using teams of advisers that specialize in different areas, from investment management to lending to financial planning.

But the brokerages have also, for the most part, failed to adapt their individualistic compensation programs — which reward experience, sales, and account size, among other factors — to fully embrace a team-driven marketplace, according to wirehouse compensation consultant Andrew Tasnady, managing partner of Tasnady & Associates.

“It's a clunky way of rewarding teams and teamwork,” Mr. Tasnady said of existing schemes, which he said reward advisers for Easter egg-like hunts for “credits” that equate to payments.

The new team award will only be given to teams including one member with a certified financial planner or chartered financial analyst certification and one member who has attended and passed a Merrill training course.

More than half of Merrill advisers operate in teams today, according to Ms. McCabe.

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