Merrill Lynch releases new compensation plan

Advisers bringing in enough accounts will be rewarded, those falling short will see compensation cut

Nov 8, 2017 @ 6:39 pm

By Bruce Kelly

With an eye on growth, Merrill Lynch on Wednesday afternoon released its 2018 compensation plan for its 15,000 financial advisers, and it contains both a carrot and a stick.

Merrill Lynch advisers who bring in a healthy number of net new accounts will be rewarded, while those who fall short of new company goals will see compensation cut, according to a copy of the plan reviewed by InvestmentNews. The plan is called the "growth grid."

The new program includes up to 2% compensation increase as an incentive for the acquisition of new clients, according to the plan. Similarly, advisers could see cash compensation decline by 2% if new minimum hurdles are not met.

(More: Merrill Lynch swells ranks of fiduciary 401(k) advisers by more that 3,000.)

Advisers in 2018 who bring in 5% of the prior year's assets and liabilities will see 1% more on their cash pay grid. Advisers who open five new accounts of so-called affluent households with $250,000 or more in assets or two $10 million households – designated ultra high net worth – will also receive 1% more in cash.

On the other hand, advisers who bring in less net new business, only three affluent households or one ultra high net worth household, will have cash compensation cut by 1%. Likewise, advisers will see the same 100-basis-point reduction in cash pay if net new assets and liabilities total 2.5% of the prior year.

For example, if a Merrill Lynch adviser with $100 million in assets and liabilities – including mortgages and loans – brings in $6 million of new client assets or liabilities and five new affluent households, he would see a 2% increase in cash compensation. The same adviser who brings in the same amount of new assets and loans but only has two new clients that qualify as affluent households would have no increase or bump in his cash pay.

(More: Bank of America wants more referrals from its Merrill Lynch advisers.)

A memo from Andy Sieg, head of Merrill Lynch Wealth Management, announcing the 2018 compensation plan used the word growth five times. "This plan aims to reinforce the entrepreneurial spirit that animates each of you – boosting us collectively to achieve the kind of growth that is possible," Mr. Sieg said in the memo.

Merrill Lynch is also increasing the amount of pay brokers will earn not as cash but as long-term, deferred compensation, by 1%. Increases in deferred compensation at large brokerage firms decrease the amount of immediate pay brokerage firms hand to advisers and are seen by some in the industry as benefiting the firm over the broker.

0
Comments

What do you think?

View comments

Recommended for you

Sponsored financial news

Does your pay stack up?

The Adviser Research Dashboard

Based on data collected through InvestmentNews' annual adviser research studies, this interactive, customizable tool allows you to view detailed data on compensation, staffing and financial performance practices from across the industry.

Learn more »

Featured video

INTV

Why broker-dealers are on a roll

Deputy editor Bob Hordt and senior columnist Bruce Kelly discuss last year's bounce-back for IBDs.

Latest news & opinion

Things are looking up: IBDs soared in 2017

With revenue up, interest rates rising and regulation easing, IBDs are soaring.

SEC advice rule may give RIAs leg up over broker-dealers

Experts say advisers will be able to point to their role as fiduciaries as a differentiator in the advice market.

Brokers accept proposed SEC rule on who can call themselves an adviser

Some say the rule will clear up investor confusion, but others say the SEC didn't go far enough.

SEC advice rule: Here's what you need to know

We sifted through the nearly 1,000-page proposal and picked out some of the most important points.

Cadaret Grant acquired by private-equity-backed Atria

75-year-old owner Arthur Grant positions the IBD for the 'next 33 years.'

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print