Salomon Smith Barney has introduced an enhanced payout schedule for inactive accounts that brokers awaken.
According to Tom Matthews, SSB's director of national sales, inactive accounts are defined as accounts that have done less than $100 in gross in the last 12 months. "It's an attempt to get FCs to assess their own business, " Matthews says. "If you have an FC doing $450,000 in gross managing $70 million, you can get him to do a better job [of rejuvenating accounts] with this program."
The new policy also applies to IRAs.
Once new business is done in an inactive account, reps will get a 50% payout on the trades over the next 12 months. By offering the enhanced payout over a full year, concerns about churning are alleviated, Matthews says.
As part of the program, Salomon Smith Barney has put into place a partnership program to encourage senior producers to turnover less productive accounts to associate junior partners. If the account is reactivated by the junior rep, the firm will pay out at 70% the first year, 60% in year two and 50% in year three, after which the account reverts to a normal grid. The originating rep gets 60% of the net in year one, 50% in year two and 40% in year three, and the junior rep gets the rest. After three years, the account goes to the associate broker.
"All of these programs are 100% voluntary," Matthews says. The incentive program went into effect Sept. 8.