IRVINE, Calif. — Wachovia Securities LLC of Richmond, Va., is expected to roll out in coming weeks a significant new incentive program.
The program, called “4Front,” will offer deferred compensation based in part on brokers’ use of the firm’s Envision
financial planning program and the number of fee-based accounts representatives have.
Wachovia brokers have yet to hear the final details of the program but have learned of its outline in meetings. They say, however, that the deferred bonuses to be offered with the program could be significant.
The incentive program has been “couched in terms of what the big prize will be,” said a Wachovia rep in Northern California, who asked not to be identified. “But what are the rules? Nobody can tell you.”
Wachovia spokeswoman Teresa Dougherty declined to comment on details of the program.
A Southern California rep said he was told that brokers could qualify for three levels: $25,000, $50,000 or $100,000 a year in deferred pay.
Assuming the maximum award, “if it compounded, the assumption is it would reach $1 million” after a six-year vesting period, said the Southern California broker, who also asked not to be identified.
The Northern California rep also heard that bonuses of up to $100,000 could be offered.
“It’s a large enough amount that I’d like to see what it is,” he said.
Retention vehicle?
Brokers say that details of the plan haven’t been finalized. But the gist of the new incentive package will be to reward brokers who have clients in fee-based accounts who use the Envision financial plan and have a written service agreement with their financial adviser.
The Southern California rep said that the program is designed as a long-term-retention vehicle, not a one-year contest. The broker also said that deferred-compensation awards will be based on the number of advisory accounts that have completed an Envision plan.
The plan would not count C shares or the firm’s fee-based brokerage accounts toward the goal, brokers said.
Brokers who use those products, such as the Southern California-based rep, “might feel like the rug was pulled out from under us,” he said.
A Wachovia producer on the East Coast, who also spoke on the condition of anonymity, said that the program would target households with more than $250,000 in assets and might include lending products.
Although they like the service, the push to use Envision has rubbed some Wachovia reps the wrong way.
A “Turning Point” campaign last year offered trips to producers based in part on the number of clients who used Envision.
“We’ve seen all this before [with Turning Point],” said the Southern California rep. “It smells like Merrill Lynch,” he added. James Hays, who took over Wachovia’s retail unit a year ago, came from New York-based Merrill Lynch & Co. Inc., where he was managing director of the high-net-worth division.
Industry observers still remember the controversy Merrill created some years ago by forcing its brokers to produce a certain number of Financial Foundations financial plans. Some Merrill brokers ended up producing plans for friends, relatives, pets and fictitious clients in order to meet the quota.
Some reps also are worried about possible compliance implications if the incentive plan rewards fee-based business.
Regulators have been taking action against firms for using fee-based brokerage accounts with inactive investors.
