Merrill pay plan focuses on broker teams and trust assets


By Jed Horowitz

NEW YORK, Dec 4 (Reuters) - The 2014 compensation plan thatMerrill Lynch introduced on Wednesday rewards brokers who workin teams and pays them a premium for attracting money fromwealthy clients that is put into trusts.

The brokerage firm owned by Bank of America Corp hasnot made any changes to its core payout structure for next year,but has introduced a "client experience" achievement award thatrequires brokers to work in teams, the first time it is offeringa monetary incentive for teamwork.

The new pay plan, outlined to Merrill's 14,000 brokers onWednesday afternoon, also doubles the revenue credits brokersget for attracting trust assets from wealthy clients andenhances a retirement program for brokers over the age of 55 tohelp Merrill retain their clients.

Big firms such as Merrill, Morgan Stanley and WellsFargo & Co's Wells Fargo Advisors believe teams enhance servicebecause brokers can specialize in areas such as investmentmanagement and lending.

Brokers and recruiters say teams also make it harder for topsalespeople to bolt to rivals since it is difficult to move enmasse while retaining clients.

About 55 percent of Merrill's brokers now work in teams, aspokeswoman said.

The new "client experience" award requires qualified teamsof brokers to remain at Merrill through the end of 2018 toqualify. At least one team member must have a professionalCertified Financial Planner or Certified Financial Analystdesignation and complete a "goals-based wealth managementtraining program" and assessment test.

Each team that doubles the revenue collected from clientsover five years will be given 10 percent of the incrementalamount over the team's 2013 revenue, the baseline. Teams willsplit the award, which is paid 50 percent in cash and has nomonetary limit, among themselves. Merrill has not yet determinedhow the rest will be awarded other than to say it will bedeferred over the long term.

"We are encouraging teaming and incentivizing teams. We arenot mandating teams," said Susan McCabe, a bank spokeswoman.

Merrill is using a relatively loose definition of teams toappease some lone-wolf brokers. Advisers can loosely affiliatewith other brokers who have areas of specialty, or even with atrainee, rather than share clients in a formal relationship.

Merrill also has tweaked its Strategic Growth awardintroduced a year ago to encourage brokers to focus assetgathering in distinct areas. The 2014 focus is trust and estatebusiness that can be directed to any part of Bank of America.

Brokers will be credited with double the total fees theybring in for creating or supplementing trust programs, aninitiative Merrill believes will help them with theintergenerational transfer of assets among wealthy clients.

The award continues to offer full - but not double credit -for all fees related to loans and fee-based accounts thatbrokers generate. Many of the United States' largest brokeragefirms are now owned by banks, which have been trying to get brokers to sell more banking products and fewer commission-basedinvestments.

Merrill's new plan also enhances a program for brokers overthe age of 55 to plan their retirement. Those who enter what iscalled a "client transition program" will be able to stay on fortwo to four years and get up to 160 percent of the amount ofmoney they collected from clients in the 12 months beforeentering the program. Prior to introducing the program, brokerswho sold their client lists had to immediately leave the firm.

Earlier this week, UBS Wealth Management Americas and MorganStanley posted their 2014 compensation plans for brokers.

UBS AG's UBS Wealth Management Americas offeredstrong incentives for its brokers to prepare financial plans fortheir wealthiest clients and to win higher expense accountallotments.

Morgan Stanley is allowing more of its advisers to qualifyfor a revenue "growth" award introduced last year for the top 40percent of brokers. In 2014, any broker who brings in $300,000more revenue through fees, commissions and loans than in 2013can get the award, which ranges from $20,000 to $300,000, basedon production and experience.

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