Wachovia Goes Halvesies

Keep it simple, stupid: That's the idea behind Wachovia Securities new grid one that offers a round 50 percent payout to brokers, once they pass a $9,000 production threshold. The simplified grid is meant to be easier for advisors to understand. For a rep earning the majority of his income through recurring revenue there are bonuses as well. But some reps are bristling at the ticket charges levied

Keep it simple, stupid: That's the idea behind Wachovia Securities new grid — one that offers a round 50 percent payout to brokers, once they pass a $9,000 production threshold.

The simplified grid is meant to be easier for advisors to understand. For a rep earning the majority of his income through recurring revenue there are bonuses as well. But some reps are bristling at the ticket charges levied for equity and options tickets.

The new grid gives reps a 20 percent payout for the first $9,000 in monthly gross, and a 50 percent payout thereafter — with some variations for reps with less than four years of experience. It includes a deferred-comp program that can award bonuses of 3 percent to 7 percent, depending on annual production.

Unlike other industry plans, however, the deferred compensation is a bonus only — earnings are not at risk. It rewards overall production and recurring revenue. Jim Donley, president of Wachovia's private client group, says this incentive is important: “The plan itself is product-neutral — but recurring revenue is not a product, it's a style of business,” he says. “We don't care if they do it or not, but we do think it's best practices.”

What has some reps upset, however, are the $15 charges for each equity and option ticket processed. The $18,000 rep with an average ticket size of $250 would have written 72 tickets a month, for a total charge of about $1,000. At $15 per, that translates into a 29 percent payout.

“It's a so-called reward but it's no better — you're still taking a pay cut,” says one longtime rep. “It's clearly geared towards the productivity of those with recurring business items for the firm, but fee-based business is not the panacea to everything.”

However, Donley says that the ticket charges existed in both Prudential and Wachovia's plans previously, only in the form of lower payouts for the first $100 of commissions, or a payout threshold before reps were paid. “I believe that FAs want clarity, and want to know what it is — we elected to call it a ticket charge.”

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