Merrill compensation changes ‘very advisor friendly’
Replacing the stick with a carrot will be a welcome change for many Merrill Lynch advisors, a prominent industry recruiter said, but the bank’s decision to change its compensation structure drew a mixed response from other experts.
On Tuesday, Merrill Lynch Wealth Management announced it was ending two contentious policies as part of its 2024 brokerage compensation plan. First, it will eliminate its five-year-old growth grid, which rewarded brokers for adding clients and accounts but penalized those who did not grow. A common complaint was that this meant less time spent working with existing customers. Second, it will also eliminate a policy, brought in only this year, that reduced brokers’ credit for transactions, hurting some reps’ commissions.
Instead, Merrill is introducing a “growth award,” which will pay up to 12 basis points on net flows up to $50 million and three basis points beyond that. To qualify, however, advisors must attract three new client households with more than $500,000 in assets each, as well as boost their clients’ prior-year total assets and liabilities by 7.5%. This must be done with “net new strategic flows,” which includes investment advisory assets, bank loans and some brokerage.
According to a report by AdvisorHub quoting an unnamed Merrill Lynch executive, about 25% of the firm’s advisors are in line to qualify.
Danny Sarch, president of Leitner Sarch Consultants and a veteran industry recruiter, said that some Merrill advisors are annoyed because they’re losing money while certain people are happy, but that it was clear the “growth plan” was not working out.
“[It incentivized] advisors to bring in new assets. And it worked. They brought in a lot more assets,” Sarch said. “But for the first
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