Bank of America wants more referrals from its Merrill Lynch advisers

Brokers will be expected to provide two referrals a year to the bank or face a 1% penalty on their payout

Dec 7, 2016 @ 12:43 pm

By Bruce Kelly

Merrill Lynch in 2017 will not change its basic pay grid for its 14,500 advisers but is raising the thresholds on two plans, one of which focuses on advisers giving referrals to other parts of Bank of America.

According to a source with knowledge of the changes to the compensation plan, which were announced internally after the market closed on Tuesday, advisers will now have to generate two referrals next year to Bank of America — double the requirement this year &mdash – to avoid a 1% penalty to their overall payout.

The referrals are simply that and brokers are not required to complete a transaction or sale of a banking product, like a credit card, according to the source.

Merrill has also increased the amount of new assets to 10% from 7% that advisers must bring in through the door to qualify for its “Strategic Growth Award,” according to the source, who added that those assets can be either fee-based or banking products such as loans.

Merrill Lynch's compensation moves come at a time when bank cross-selling is facing more scrutiny than ever. In September, Wells Fargo & Co. was fined $185 million for opening checking and credit card accounts that customers never approved or knew about.

Merrill Lynch in 2017 is keeping its current 11 production breakpoints, according to the source, with payouts ranging from 35% for advisers producing fees and commission under $250,000 to 50% for advisers generating $5 million or more in fees and commissions.

MORGAN STANLEY

Meanwhile, with an eye on reducing costs, Morgan Stanley is increasing the revenue thresholds its advisers have to reach in order to see a pay increase in 2017.

According to two published reports, Morgan Stanley will raise certain pay thresholds on its compensation plan, known as a grid in the industry, by about 10%. That roughly means that a broker who produces $800,000 in fees and commissions in 2016 will need to generate $880,000 next year in order to receive the same overall pay, said Danny Sarch, an industry recruiter.

“All thresholds are 10% higher,” he said.

AdvisorHub.com last week first reported the change in Morgan Stanley's compensation plan for its nearly 16,000 advisers.

A Morgan Stanley spokeswoman, Christine Jockle, did not return calls to comment.

(See: Finra fines Morgan Stanley $1.5M for failing to deliver fund prospectuses online )

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