WealthManagement Magazine

Merrill Lifts Fee Ceiling on Unlimited Advantage

Merrill Lifts Fee Ceiling on Unlimited Advantage Brokers have flexibility to charge high-maintenance clients 1.5%, discount others.Merrill Lynch is allowing its retail brokers to raise their prices on new Unlimited Advantage accounts.Beginning Jan. 1, 2001, brokers opening Unlimited Advantage accounts of less than $1 million could set a maximum fee of 1.5% on equities, up from a previous 1% maximum,

Merrill Lifts Fee Ceiling on Unlimited Advantage Brokers have flexibility to charge high-maintenance clients 1.5%, discount others.

Merrill Lynch is allowing its retail brokers to raise their prices on new Unlimited Advantage accounts.

Beginning Jan. 1, 2001, brokers opening Unlimited Advantage accounts of less than $1 million could set a maximum fee of 1.5% on equities, up from a previous 1% maximum, according to the firm. Merrill also increased top fees for larger accounts (see "Merrill Lynch's Tiered Unlimited Advantage Equity Fees," below).

Why did Merrill raise the ceiling? "A lot of brokers were griping about the payout on Unlimited Advantage accounts," says a rep in New England. "There's lots of service involved with transaction-heavy clients, and you're not getting paid for that work."

That's where the pricing flexibility can come in handy, he says. "You can charge 1.5% for those transaction-heavy clients, and you can also price downward for larger clients who require less maintenance."

Unlimited Advantage accounts replaced Merrill's old Financial Advantage accounts, which charged 2%. So brokers were previously generating twice the production credits. "We had some $500,000 producers who had their paychecks cut in half almost immediately," the broker says.

Merrill spokesperson Jim Wiggins says the firm's 18 months of experience with Unlimited Advantage gave management a feel for the "intensiveness of service" clients demand. "So we've priced it appropriate for the level of service required and still maintained a value in the marketplace."

Executives in Merrill's private client group, including President Stanley O'Neal, broke the news to producers during a video broadcast in December. They explained the higher fee caps apply only to equities. Fees on mutual funds in the accounts remain at 1% and fees for fixed-income products and cash stay at 30 basis points.

Brokers seem unfazed by the announcement. In fact, the New England rep says the price hike is practically meaningless. Existing customers will continue to enjoy the old 1% rate unless their brokers decide to renegotiate for a higher fee.

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