Merrill to continue pay plan that rewards advisers for new clients

So far in 2018, Merrill Lynch has seen the best performance in this area in the last five years

Oct 15, 2018 @ 1:49 pm

By Bruce Kelly

When it reveals its 2019 compensation plan in the coming weeks, Merrill Lynch will continue to reward its wealth management advisers for bringing in new client accounts.

Last year, Merrill Lynch unveiled a 2018 pay grid that rewarded advisers who brought in a healthy number of net new accounts. Those advisers who fell short of company goals had their compensation reduced. The plan was called the "growth grid."

Merrill's 15,015 financial advisers can expect to see such a compensation plan next year, said a senior Merrill Lynch executive, but he declined to give specific details ahead of the firm unveiling its compensation plan, known as the grid in the retail securities industry.

"We feel the growth grid has been successful, and we expect to see that in the 2019 compensation plan for advisers," said the executive, who asked not to be named when speaking to reporters on Monday morning. "There may be slight changes in 2019, but the growth grid will remain a large part of the comp plan. We are listening to adviser feedback."

Merrill Lynch in 2018 has continued to see the strongest performance in this area in at least the last five years, the executive said. The number of new households has almost doubled to five on average per adviser, the executive said. In the past, Merrill Lynch advisers had been averaging about 2.5 gross new households per year.

He added that Merrill Lynch remains committed to staying in the protocol for broker recruiting, an industry agreement that makes it easier for a financial adviser to seek employment at a rival firm. A year ago, Morgan Stanley and UBS Financial Services Inc. exited the agreement as a way to keep more of their advisers in their seats.

Ever since, it has been widely speculated that Merrill Lynch would follow its two rivals and leave the broker protocol, but the company continues to indicate publicly that it will remain in the agreement.

"We want to be the employer of choice in the wealth management industry," the executive said.

Meanwhile, Merrill Lynch's parent company, Bank of America Corp., reported positive earnings Monday morning.

Merrill Lynch Wealth Management revenue rose 3% when compared with last year's third quarter, reaching $3.9 billion, according to Bank of America's earnings report. Net income for the entire wealth management group, called Global Wealth and Investment Management, increased $240 million, or 31%, to $1 billion when compared with the same quarter last year. That increase was driven by strong client activity and continued discipline around expenses, as well as the impact of last year's tax reform.

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