ML PMD Program PCs
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[quote=BACFA]
[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.
[/quote]
I was with you right up to the point that you said only 10% graduate the PMD program. I'm not saying that is wrong, but I am saying it sounds low. I'd need something other than anecdotal evidence that the pass rate is that low.
I would guess it's more like 25-30% make it. That is still incredibly low.
[quote=BACFA]
[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%.
[/quote]
non-recoverable draw = forgiveable draw, which is to say that there is no recovery of the draw if you do not cover it with actual commissions.
BTW: I was under the impression there are no FA's left at BAC which would mean you are a ML FA. Are you clinging to the past or is there a new program to put FA's back into the BAC branches?
[quote=BACFA]
[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%.
[/quote]
non-recoverable draw = forgiveable draw, which is to say that there is no recovery of the draw if you do not cover it with actual commissions.
BTW: I was under the impression there are no FA’s left at BAC which would mean you are a ML FA. Are you clinging to the past or is there a new program to put FA’s back into the BAC branches?
Will ML PMD allow you to stay in program if u fail series 7 on first go round. A friend of mine got a 63. What if he offers a promissory note for any pay from failure of test until he passes?
[quote=ZwingDing]
[quote=BACFA]
[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%.
[/quote]
non-recoverable draw = forgiveable draw, which is to say that there is no recovery of the draw if you do not cover it with actual commissions.
BTW: I was under the impression there are no FA's left at BAC which would mean you are a ML FA. Are you clinging to the past or is there a new program to put FA's back into the BAC branches?
[/quote]
ZwingDing: I don't think Merrill will ever publish their true PMD failure rates. But I would agree that a pass rate from 10% to 30% is still abysmal. My anecdotal evidence is mostly from recruiters that write in our various trade magazines (including this one) and my friends at Merrill in other offices.
I still have access to my old BAC branches but my book is large enough that I don't go there any more. I'm lurking in the Rookie forum because I'm thinking of working with a PMD. Merrill and Bank of America have pilot programs where they put FAs in the branches. I don't think they are PMDs but are advisors from Edge. That is where bank referrals end up, anyway (and then triaged out to the Complexes). Not putting PMD's in the bank branches is a terrible waste of potential. The PMD hurdles would be almost guaranteed with access to CD's, large checking and savings accouts, etc.
[quote=Paradigm]Will ML PMD allow you to stay in program if u fail series 7 on first go round. A friend of mine got a 63. What if he offers a promissory note for any pay from failure of test until he passes?[/quote]
Paradigm: I don't know how many chances a PMD can take the Series 7 but there are so many PMD candidates that they will not do whatever you're asking them to do.
[quote=FADavo]
[quote=BACFA]
[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.
[/quote]
You cannot meet the hurdles without meeting the numbers I just stated. Explain how anyone pops 250K in PCs by year 3 if the numbers can't be met.
On top of that "unrealistic" in what sense? There are 5 PMDs at my office, 3 of which are under 24 LOS and have put away over 16 million.
I cannot understand how the PC credits can be met without achieving those numbers, so stating that they are unrealistic seems "unrealistic" to me.
Explain how you get to 250 PCs (for the LOWEST salary bracket, 360 for middle tier) without hitting those numbers?
[/quote]
FADavo: Well, right off the top of my head, if you do $10mm in variable annuities, that would be 250K PCs. If you did life insurance or Lincoln Moneyguard, the percentage is even higher (than the 2.5% the that the VAs pay). I don't have the PMD hurdles in front of me but I'm sure the right combination between PC's and annuitized business can be calculated using a spreadsheet.
My Complex has at least 20 PMDs (large east coast area) and the only ones hitting all the hurdles are related to the senior advisor. There are a few that are close because they're on a good team.
I don't think what I stated is unrealistic. I think the Merrill hurdles are unrealistic.
[quote=Paradigm]Will ML PMD allow you to stay in program if u fail series 7 on first go round. A friend of mine got a 63. What if he offers a promissory note for any pay from failure of test until he passes?[/quote]
Not likely but possible. I believe it takes approval two management levels above the local branch manager to get that done.
So without approval of the regional manager hed be out of the program and a 63 may not be close enough for them to believe he could pass even if he has a strong network? Is that what you are saying?
[quote=BACFA]
[quote=ZwingDing]
[quote=BACFA]
[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%.
[/quote]
non-recoverable draw = forgiveable draw, which is to say that there is no recovery of the draw if you do not cover it with actual commissions.
BTW: I was under the impression there are no FA's left at BAC which would mean you are a ML FA. Are you clinging to the past or is there a new program to put FA's back into the BAC branches?
[/quote]
ZwingDing: I don't think Merrill will ever publish their true PMD failure rates. But I would agree that a pass rate from 10% to 30% is still abysmal. My anecdotal evidence is mostly from recruiters that write in our various trade magazines (including this one) and my friends at Merrill in other offices.
I still have access to my old BAC branches but my book is large enough that I don't go there any more. I'm lurking in the Rookie forum because I'm thinking of working with a PMD. Merrill and Bank of America have pilot programs where they put FAs in the branches. I don't think they are PMDs but are advisors from Edge. That is where bank referrals end up, anyway (and then triaged out to the Complexes). Not putting PMD's in the bank branches is a terrible waste of potential. The PMD hurdles would be almost guaranteed with access to CD's, large checking and savings accouts, etc.
[/quote]
I agree that ML will never publish the true wash-out/success rate for the newbie program du jour. Your anecdotal evidence from recruiters is still pretty persuasive. If the wash-out rate is around that 10% figure then I would do the following math:
10% of PMD make it.
Of those 10% 1/2 are on teams that keep the PMD alive during the progarm.
That takes the survival for non-team PMD's down to 5%.
Of that 5% - an additional 3% (of the 100%) make it because they have pre-existing networks of people who they can access fairly quickly for sufficient assets to stay alive during the program.
That means that if you do not have a team that will feed you or a real strong network from which you can draw adequate assets the real survival rate is:
2% ----
I recently spoke with a 30+ ML vet in another time zone who characterized the PMD program as it now exists as an "atrocity." That is an exact quote.
I agree with you on putting PMD's in the BAC branches. Doing that would increase the survival rate by factors.
Anyone who thinks that this fail-out rate is not a pre-planned outcome by ML is kidding themselves. All it would take would be to hire sales managers who are solely judged on whether or not their PMD'ers make it. That is what corporate sales departments do. They would never stand by for a wash-out rate like this program.
We are about to lose a PMD. This person could be a great asset and producer to ML if they would just throw him a lifeline. He is superb with prospects and is ethical right to his DNA. But, the producers in the office are waiting to swoop in on the few decent accounts he has landed.
As long as the vulture FA's are dictating policy it will never chnage.
My advice to people looking to enter the field would be to stay away from the wires. Save up enough money so you can keep body and soul together and go to work for an indy, or start out at a bank/CU.
So is it safe to say that any PMD who fails the Series 7 will not be allowed to retest?
So is it safe to say that any PMD who fails the Series 7 will not be allowed to retest?
So is it safe to say that any PMD who fails the Series 7 will not be allowed to retest?
Paradigm: Again, I don't know how many times someone is allowed to take the 7. PMD hiring is inflated now because B of A would love a higher head count than Morgan Stanley. Most PMD candidates claim they have an amazing network they can call so Managers tend to discount that unless it's someone on their second career. If they were an accountant for 10 years prior to coming to ML, then they would consider that a good network.
ZwingDing: I think even if someone drops out of PMD, having Merrill on their resume helps to get the next job. And I know plenty of people that have left Merrill and are making a fantastic living. Merrill has a way of brainwashing their advisors into thinking they are the only worthwhile company in town.
FADavo: I know the PMD program very well and I have studied the PMD documents. I know some of the PMD trainers down in Charlotte (from my B of A days) and in Hopewell. I've run the various permutations of the PC vs. annuitized assets ratio and compared it with money that experienced advisors raise. if you look at the $500k producers (across all channels, wire, indy, bank), their goals are generally $10mm/year in new assets. This is coming from national training classes and confirmed even by Merrill's SPA awards. I'm not saying that you can't or shouldn't be in the PMD program personally. Nor am I telling you to give up. I was just alluding to your original posts about PCs and raising money. $10mm/year is a huge number for someone starting in the business. And the fact that you are asking these questions on this forum, tells me that you want real answers from people that won't give you the canned answer from your PMD Coach.
[quote=Paradigm]So is it safe to say that any PMD who fails the Series 7 will not be allowed to retest?[/quote]
It's up to the local manager. If he/she/it decides you are worth it they have to convince their boss and their bosses of the same thing. The more typical thing, I think, is if you do not pass you 7 your stuff is sent home to you in a box. It's kind of way to show you MIGHT be a good hire.
I'm not saying it is right or wrong, but it's what I hear. I know that a person in an office of which I have personal knowledge did not pass and was not allowed back in the building.