Merrill going to 250k minimum

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Dec 20, 2011 5:39 pm

After learning this, I am seriously thinking about going back to my independent firm. I have a great relationship with my old boss and we have talked recently about how I can come back anytime. He is looking to retire in 4 years and told me if I come back, I will take over for him. No if's ands or buts, I would take over his book and the firm.  My only problem is I need a salary. I was thinking I could offer a proposal that I look over my bosses clients portfolios (100 per year) and do a 60/40 split of whatever re-balancing I deem necessary  while I am building my book. He really doesn't have time to go over his clients portfolios the way they need to be looked at and it could be a win win for the both of us. I assume that at a $1000 average per client, that would be 100,000 grand and would afford me the opportunity to stay afloat and build my business.

I just don't know how to approach him with this idea or if it is any good. Any input would be appreciated.   

Dec 24, 2011 7:36 pm

Hasn't merrill been at 250k? Im a new intern there and they say 250k is their standard

Dec 25, 2011 10:39 am

the "new" part of the 250 is you do not get paid on any relationship under 250K.  zero, zip.  someone has 249K and buys all A shares, the broker gets zero.

Previously they were pushing 250K relationships but you got paid down to 100K.  If the other wires don't make the same move, I anticipate this causing a major flux.  in small and mid size markets this will cause serious disruption for people doing between 300 and 600K in production.

Dec 25, 2011 7:37 pm

Imagine writing a $200K VA. If you can't find a way to HH that with another $50K in assets you will get precisely $0 compensation. ML will keep all the comp. And, you can anticipate the HH police to be patrolling looking for non-kosher HH's.

Mar 13, 2012 11:31 pm
Dec 25, 2011 8:40 pm

What it really hurts is PMD's.

Dec 26, 2011 1:32 am

Check my other posts. A PMD would be me. I have done the numbers with some colleagues and at the end if 3 years, you're most likely looking at a nice pay cut to about 30 grand.

Dec 26, 2011 1:08 pm

ZwingDing ~ I will pm you about my thought process.

I started this thread to not bad mouth merrill or the pmd program. I just wanted a little help in my approach with my old boss. Honestly, the pmd program has very extensive training, but the new compensation plan is no bueno for PMDers who have recently received their production number.

Dec 26, 2011 2:24 pm

I has much less impact on new PMDers.  you still get PCs for the produciton done under 250K, which means it will go toward your bonuses and hurdles.  I think it may cause some issues with the "type" of book you are building early, though, as you may be forced to take accounts early that do not pay later.  

PM your thoughts to me as well.  The other guys in my complex were talking about how this might affect us.  We sort of came to the conclusion that it might be more painful for the guys that are 2 years into PMD as some of the low end scraps they are getting tossed are only going to pay for a few more months.  

If you just got your number, you have 39 months of this not affecting your pay EXCEPT when it comes to the monthly incentive that would pay you on top of your bonus.  

None of that matters, in my opinion, because I think that if the other wires choose not to follow this trend, then Merrill will either roll back the number to 150 or 100K OR they will stand to lose all their talent under 500K in production to UBS, MSSB and some of the regionals.  

Perhaps that is there plan.  To me, it feels like a totally disconnected move made by a bunch of bankers that have no understanding of how the business works.  

Dec 26, 2011 3:09 pm

There is definetly some confusion. We were told sub 250 in the pmd program will be paid and grandfathered in upon graduation.  

Interesting times lie ahead.  

Dec 26, 2011 4:48 pm

Mtnman, <250K do indeed qualify for PMD comp. during the program. I haven't seen anything that says those accounts are grandfathered. What I read was that HH currently already in existence that are between 100-250 will be grandfathered. Come next Monday all new HH <250... ML retains the compensation for themselves. The slave masters will have a little more money to give themselves bonuses and pay for more travel junkets so they can create better strategeries and have more jumbo shrimp. 

Just always remember that when you're experiencing difficulties or see people get canned it is because they/you  are lazy and shiftless. it's not because someone's failure is hard coded into the system... Or that the system needs asset gatherers to fail so the few can inherit and survive. 

I saw nothing about an exemption for PMD's after they leave the program. Did you see something in print?

Dec 26, 2011 5:09 pm

No, nothing in print.

Would it matter though? That 250 will go to 500 eventually. They have a plan, and unfortunately its on a need to know basis. As in when they dont need you anymore.  Unfortunately for them, not everyone is a lemming. Next few months will comical i believe.  And remember, management can have their expense accts lowered when the cigars explode.  

Dec 26, 2011 5:21 pm

So how much harder does this make it for a new FA in the PMD program? 

What is the minimum a new FA can open an account for to count towards the PC hurdles...250K?

Dec 26, 2011 5:56 pm

[quote=Kresge]

So how much harder does this make it for a new FA in the PMD program? 

What is the minimum a new FA can open an account for to count towards the PC hurdles...250K?

[/quote]

One word... Experience

People say that there is no difference between closing a 100k account and a million dollar account but there is. Anyone who has a sizable portfolio already has an advisor and regardless how bad their advisor is, they will not let a PMDer with a whopping 12 months experience take over their account.

Dec 26, 2011 8:43 pm

Dear PMDer, thank you for your efforts. Please leave your assets at the front door as you make your way to the unemployment office. Please make sure you note up your contacts with anyone who might possibly be a future HH in Salesforce. The big boys will take it from here. We thank you for your work in the sweatshop and we want you to know that we have a fresh wave of marks ready to take your desks real soon. They, like you, will start out with great expectations.

Write if you get work.

And remember, you failed because you are lazy and you just generally suck.

Dec 27, 2011 7:44 am

Given these type of goofy rules....  What is the draw to work at a firm like this?

Is it training?

Dec 27, 2011 10:40 am

So I am having a meeting with my former employer today. I am pretty confident about my plan and hopefully we will be able to come to an agreement.

Merrill is a great place to work and my complex has provided me with great training. The 100k minimum was acceptable and made sense. This new 250k minimum leaves a PMDer in a situation where they might not do what is best for their clients so they can generate PC's and keep there job. Even if they are able to graduate the program, the sub 250k accounts that they picked up along the way to generate the needed PC's will be worthless and sent to Merrill Edge. The clients who are sent to Merrill Edge will not be happy with the PMDer and will not refer any business to them.

Anyone who says that this change does not affect a PMDer while they are in the progaram and not to worry about it until they gradutate will have a rude awakening when they go 100% commission. Anyone who is not thinking about the long term consequences will most like starve out even after graduating the PMD program.

The only option I see is to pool with a Senior FA who is going to retire in the next 4 years (since you have to be pooled for a minimum of three years to automatically transfer their book to you) and be some one's employee. Its a good deal if you can actually find and cultivate a relationship with a Senior FA who is willing to bring you on with the understanding that YOU take over their book. 

Dec 27, 2011 10:51 am

Amber, training is dependent on the complex and local office. In my world training is minimal. In other places it's quite good. Don't believe the training is good because a hiring manager makes the claim. Ask to see their written training program. If they don't have one or its just the national stuff there is no reason to come to ML any longer. 

Dec 27, 2011 11:07 pm

One advantage of Merrill is to stick around and collect assets from other departed advisers. I know many PMDs who have graudated because of this. Could they raise a dime on their own? I think if they had to dial a cold call they would s**t their pants.

With the rules of FINRA, and your stupid compliance, and the additonal internal DNC you might as well learn morse code to get prospects. B/D is a dumb model and getting dumber.

RIA is the way to go.

Dec 28, 2011 1:33 pm

I have crunched the numbers and its all pretty lame.

You need 250,000 PC's to graduate:

Merrill's plan is 30 million total AUM with 15 million fee based

Fee Based: 15 million @ 1% = 150,000 PC's

Commission: 15 million @ an average of 3%= 450,000 PC's

Don't get me wrong. 600,000 PC's sounds pretty good to me, but 30 million in 3 years? It can be done, but unlikely for a newb to bring in 10 million a year.

10 million a year is about 840k a month.

The way I see it is that 600,000 PC's will earn someone at Merrill about $240,00(and yes, that is taking into account the quarterly bonuses.) In addition, PC's are not in direct relation to actual dollars. I have seen where $2500 equates to 2,250 PC's. Food for thought...

At an independent you will not be able to ride the Merrill name, but you are looking at having to bring in about 15 million to earn the same amount. I am not saying that an Indy is the end all be all or the way to go. Just crunching numbers.

Indy 15 million based on a 50/50 split

$7,500,00 @ 1%= $75,000

$7,500,000 @ 3%= $225,000

$300,000= (on average) $240,000

5 million a year is about $416,500 a month which is still a hefty number, but not nearly as large as 840k a month.

What I am basically saying is that if you can bring in assets, you can bring in assets anywhere.

*** A 70/30 split Fee Based to Commission on the indy side***

Every 10 million should earn you about $112,000

7,000,000 @ 1%= $70,000

3,000,000 @ 3%= $90,000

$70,000+$90,000= $160,000 @ 70%= $112,000

*** A 70/30 Fee Based to Commmssion at a wire***

7,000,000 @ 1%= $70,000

3,000,000 @ 3%= $90,000

$70,000+$90,000= $160,000 @ 38%= $60,800

This assuming the PC's match dollar for dollar.