ML PMD Program PCs

or Register to post new content in the forum

64 RepliesJump to last post

 

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Jul 1, 2011 4:14 pm

I was wondering if you get "bonus" phantom PCs that count toward PMD program goals if they fee is annuitized?  

I spoke with a rep that used to be in the POA program back in the early 2000s and he said they would get "phantom PCs" that would not count toward what they were PAID, but would count toward their hurdles.  He said it would be anywhere from 2 to 4x depending on the trail/product.  

Do they still do this?  I have combed the forum and seen nothing specifically stated about this in all the PMD program discussion, and I know the 3 year PC goal is really the primary hurdle (as the NNA and NNH don't seem all that high).

Thanks in advance.

-Dave

Jul 1, 2011 9:18 pm

[quote=FADavo]

I was wondering if you get "bonus" phantom PCs that count toward PMD program goals if they fee is annuitized?  

I spoke with a rep that used to be in the POA program back in the early 2000s and he said they would get "phantom PCs" that would not count toward what they were PAID, but would count toward their hurdles.  He said it would be anywhere from 2 to 4x depending on the trail/product.  

Do they still do this?  I have combed the forum and seen nothing specifically stated about this in all the PMD program discussion, and I know the 3 year PC goal is really the primary hurdle (as the NNA and NNH don't seem all that high).

Thanks in advance.

-Dave

[/quote]

No phantom PC's.

Jul 20, 2011 9:38 am

I don't know about receiving "phantom PCs" for annuitized business, but I do believe they give phantom PCs for referrals to Merrill Edge.  I'm also in the PMD program and we recently had someone from Merrill Edge come in to talk to us and said that if you refer people over to Merrill Edge you'll get credit for NNAA, NNHH and PCs while in the PMD program to meet hurdles, but once we are out of the program we would not be paid on those.  He didn't refer to them as "phantom PCs", but they are effectively phantom PCs.  

I could be totally wrong, but this is how I understood what he said to us.  

Sep 20, 2011 7:24 pm

[quote=CFP2BE]

I do

Jul 20, 2011 7:21 pm

Yeah, I dunno if it's Mother Merrill or BOA, but the bureaucracy is RIDICULOUS!!!!!!!  One of my main complaints there.  Best of luck.

Jul 20, 2011 9:31 pm

you're at ml, not gonna make much

Jul 20, 2011 10:46 pm

Love,

You're right, being at ML one has to be a big producer to make any real money.  That's why most people (myself included) go there to build a book and networks while collecting a salary, then they go indy and get a big fat pay raise.  I wouldn't shed a single tear if they boot me out of the PMD program. 

Most people who stay there want the prestige of being able to say they work at Merrill Lynch.  I'll take the $$$, thank you very much!

Sep 20, 2011 7:26 pm

[quote=LoveInvesting]you'

Jul 21, 2011 8:53 am

[quote=CFP2BE]

Thanks for the response.  I actually got offered the job and am going through the background check part.  Holy hell is this thing insane.  I had to call to ask questions about it because I worked for my own LLC that consulted for others and didn't know how to list it on the employment search (they said to list it as the working for the LLC and then comment about it in the notes, btw).  Damn, that email they send about it is freaking scary.  If I get anything wrong it will come back unsatisfactory and they pull the offer?  wow.  

I have nothing that will pop up on the background check, but I was surprised with how insane they were about the employment check.  

[/quote]

Answer the questions honestly and you will be fine.  What they are looking for is anything that might prevent your U-4 from going through smoothly and internal compliance/conflict checks.  They'll dig a little deeper to confirm that you are not actively working a side business if you list yourself as a owner, director, manager, etc. but not as an employee.  Even if you are a managing member of an LLC, listing 12 hours a year to "maintain the LLC" should still be fine...but they can get wierd in compliance and you may need to clarify.

Good luck.

Jul 21, 2011 9:00 am

[quote=FADavo]

[quote=LoveInvesting]you're at ml, not gonna make much[/quote]

quality post.  

The average production at ML just broke 900K, and with their bonus payout pushing those producers to something close to 50%, I doubt that most people here would say that the average guy making 425-450K is doing a little better than "not making much".

Just a thought.

[/quote]

That's like saying being a professional baseball player in the US is where to be since the "average" incomes are so high.  How many single-A players does it take to equal one A-Rod?

While true that ML represents a better "Bell Curve" than most others with the higher "average" - you need to take into account many, many factors including LOS, location, current markets/environment.  It's great to know it's possible but it doesn't remove the strong odds and material fact that median/mean = lies, damn lies, and statistics. Don't be fooled by marketing. 5 years of hard, hard work and some luck to even get in the game no matter where you are.

Good luck.

Sep 20, 2011 7:27 pm

[quote=JustDoIt]

Sep 20, 2011 7:33 pm

[quote=JustDoIt]

[

Jul 21, 2011 7:32 pm

I stand corrected.

Jul 21, 2011 8:32 pm

FADavo,

Yeah, but the 10-15% of $1 mil is $100-$150k IN YOUR POCKET!!!  That is not chump change!  That's a very nice salary on its own!  Moreover, working at Merrill you really don't "work for yourself".  You are an employee.  You wanna create your own powerpoint for a seminar?  Good luck getting it through compliance!  They'll ask you 'why don't you use a pre-approved Merrill presentation?'  COS IT'S DOGSH*T, THAT'S WHY!!!  Most of their marketing material is dogsh*t!  You wanna create a blog to post some thoughts and tips?  Nope.  You wanna prospect through linkedin or facebook?  nuh uh.  I'll take a pay raise and go indy, and be truly "self-employed", thank you very much.

Jul 22, 2011 7:20 am

FADavo, the Average Revenue is over $900,000 but that is different than Average PCs, which is around $750,000.  Revenue includes things that don't pay anything to the advisor, such as fund fees paid to directly to ML or the spread on CDs.  But to your point, it's still a decent living at a +40% payout.  However, keep in mind the median is much lower than the average because of the massive revenue from the biggest producers.  

Please run your projected income into the fifth year.  When you come out of PMD, you will lose the $40,000 salary (higher or lower, depending on the PMD), which is equivalent to $100,000 PCs.  Your salary will most likely drop in the fourth year and fifth year. 

CFP2BE, if a PMD is doing $1 million in PCs (will never happen), he or she can opt out of PMD and go directly onto the grid.  And not all of the PMD grid is at 15%, the higher amounts are at 47%.

 I don't think being an "employee" really makes that big a difference, you still own your clients.  With Protocol Agreements so common now (allows you to take your book with you), that's all that really matters. 

Not trying to threadcrap, just fact checking for you guys, with some of my dumb opinions mixed in.

Sep 20, 2011 7:32 pm

[quote=CFP2BE]

Sep 20, 2011 7:35 pm

[quote=BACFA]

Jul 22, 2011 10:37 pm

FADavo,

Within the last couple of weeks ML sent out an email talking about a linkedin pilot they are running.  I asked my compliance officer about prospecting through facebook and linkedin, as well as writing a blog, my compliance officer said no, it's against ML policy.  So, I don't know how or if the FAs you're referring to got clearance to do what they're doing (maybe they're part of a pilot), but I was given the predictable no from compliance.

Jul 22, 2011 11:20 pm

[quote=FADavo]

[quote=BACFA]

FADavo, the Average Revenue is over $900,000 but that is different than Average PCs, which is around $750,000.  Revenue includes things that don't pay anything to the advisor, such as fund fees paid to directly to ML or the spread on CDs.  But to your point, it's still a decent living at a +40% payout.  However, keep in mind the median is much lower than the average because of the massive revenue from the biggest producers.  

Please run your projected income into the fifth year.  When you come out of PMD, you will lose the $40,000 salary (higher or lower, depending on the PMD), which is equivalent to $100,000 PCs.  Your salary will most likely drop in the fourth year and fifth year. 

CFP2BE, if a PMD is doing $1 million in PCs (will never happen), he or she can opt out of PMD and go directly onto the grid.  And not all of the PMD grid is at 15%, the higher amounts are at 47%.

 I don't think being an "employee" really makes that big a difference, you still own your clients.  With Protocol Agreements so common now (allows you to take your book with you), that's all that really matters. 

Not trying to threadcrap, just fact checking for you guys, with some of my dumb opinions mixed in.

[/quote]

your points are well taken.  The only one that doesn't make sense is the "drop in pay" for year 4 and 5.  That doesn't add up to me.  

To get the PCs to graduate, you probably need to be on a projection (MINIMUM) that looks like this:

Year 1  2.5 million new, production at 20K

2 7.5 million new, 10 million total AUM, production at 80K, aggregate of 100K PCs

3 10 million new, 20 million total AUM, production of 160K, aggregate of 260K PCs.

So in year three, just to meet the MINIMUM (250 PCs being the hurdle) you need to be at around 20mm in assets. So project that growth for year 4 and 5:

4 = 12 Million in new, 32 million in total AUM, production of 260K.  At a 40% payout that is 103K.  

5 = 12 million in new, 44 million in total aum, production of 350K.  At a 40% payout that is 140K.

both of those, again, at only expected minimum growth that would barely keep you in the program (3rd quartile), would mean that year 4-5 would be bigger payouts than 1,2 or 3.

Maybe I am missing something?

[/quote]

FADavo,

1.  The numbers in your example for a PMD are unrealistic and impossible to achieve.  $7.5mm in year 2 and $10mm in year 3 canot be done unless you're teaming with a senior FA or you have Dad handing you his book.    $10mm is a big number even for experienced advisors, and that's with existing clients and a steady schedule of seminars.  And you'd have to be Gordon Gekko to raise $12mm in your 4th year.  This is regardless of hard work, great leads, amazing networking, sleeping on a cot in your office.  Your numbers are impossible without some sort of outside help.

2. A more likely scenario for most non-partnered PMDs is that they survive the program by doing high commission products so they can hit the PC hurdles (generally considered the hardest one to meet).  However, that sacrifices your recurring revenue in year 4.  Your salary is only "weaned off" for two years so I'd say it's closer to rolling off a cliff.  I'm not going to do the math here but for most PMDs, they are losing $40k-$45k salary when the graduate.  So, in year 4, not only do you have much lower recurring revenue than in your example, you are also dealing with a $0 base.  

3. Assuming you are on a team and make it through the PMD program, the team will expect you to bring a lot of new assets that have to be split.  Or, in many cases, they feel that they got you through the program and owe you nothing and decide to split the accounts you opened the first 3 years.  

I've spoken with many PMD's and FA's and this harsh reality is why only 10% finish the program.  And most of those that finish, are blood relatives of an FA.

My advice would be to get in early, stay late, and get to know the successful advisors in the office.  Experienced FAs will most likely ignore you but it will be up to you to make an impression.  Someone will notice and invite you on their team.  

Jul 22, 2011 11:29 pm

[quote=ZwingDing]

IMO, it is a mistake to think of the guaranteed up-front income as a salary. It is actually a non-recoverable draw against commissions. The draw slowly winds down to $0 at the end of the PMD program. During the program you are eligible for monthly commissions only if they are in excess of the non-recoverable draw. That is a draw NOT a salary. If you are entering the PMD program you need to understand the difference. This is not a corporate B2B sales position with a salary to even out the highs and lows of commissions. It is a short-term draw to get you started and then to wean you off of in anticipation of being straight commish.

BTW: Many PMD's see their income go down when they exit the program. One thing you want to watch is discounting your managed money clients to get their business. Once you exit you will find that your income is going backward while they are getting a break.

You are eligible for a quarterly bonus and an annual pay-out based on exceeding the relevant hurdles AND a subjective judgement by the local manager that you are in good stead at the office.

[/quote]

ZwingDing,

You are correct, the salary really isn't a salary but I would equate it more as a forgiveable draw.  Technically, you have to beat your salary and one-third of last quarter's bonus to get paid anything additional for the month.  However, you don't get penalized for missing your numbers if you don't hit it (hence, it's "forgiven" for the following month).  

My advice would be to sandbag your revenue and have a huge month one month per quarter.  Hopefully, you can hit your hurdles for the quarter (collecting your quarterly bonus) and the additional PCs for the big month are paid as high as 47%.