WealthManagement Magazine

Merrill Lynch Overhauls Trainee Program

Training period to go five years. Financial plans still required.Starting in January, Merrill Lynch will stretch out the amount of time broker trainees spend in its Professional Development Program (PDP) to five years.Although the core of Merrill's training program remains a two-year commitment consisting of classroom instruction and supervised branch experience, trainees will be required to fulfill

Training period to go five years. Financial plans still required.

Starting in January, Merrill Lynch will stretch out the amount of time broker trainees spend in its Professional Development Program (PDP) to five years.

Although the core of Merrill's training program remains a two-year commitment consisting of classroom instruction and supervised branch experience, trainees will be required to fulfill additional continuing education requirements over the next three years, says spokesperson Susan Thomson.

"Brokers will still be prepared to work after two years, but we felt it would be unfair to try and cram all this training into that time span," Thomson says.

Merrill executives would not elaborate on PDP compensation, but several brokers say the salary-plus-bonus plan will probably be extended past the current two-year period to encourage trainees to build more fee business.

One Merrill producer says an extended salary structure would replace the "phantom production credits" provided to rookie brokers as a supplement for products that do not charge hefty front-end loads, such as C shares.

"We've been hearing some rumblings about the firm replacing those phantom PCs. Apparently this is the replacement," the broker says.

PDP bonuses are determined by trainees' success in gathering assets, their production and the number of financial plans they produce. Trainees are required to sell a dozen Financial Foundations plans a year to qualify for all bonuses. This past August, Merrill dropped that quota for established producers (see September 2000 RR, Page 30).

The program requires trainees to earn Merrill's internal Certified Financial Manager designation within five years and strongly encourages them to obtain the Certified Financial Planner mark, Thomson says.

"Merrill has always been an innovator in this industry," says a Merrill broker in the Southwest who likes the plan's emphasis on financial planning. "This move should bring us tremendous kudos."

Another rep says the PDP was overhauled because the new Merrill management regime dislikes recruiting and would rather hire newcomers. Jim Hays, director of training and leadership development for U.S. retail business, is spearheading the changes.

Thomson says it is "premature to comment" on the firm's stance on recruiting from competitors. Merrill's own noncompete language in PDP employment contracts has not changed.

Merrill's curriculum will offer some subjects earlier in the training cycle, topics such as team building, leadership development and serving high-net-worth clients. The firm will also deliver instruction more often through its workstations.

That change could cause bottlenecks as some trainees now have to share computer systems with brokers to complete their classes, one rep says.

But the firm insists a longer, more formal program will boost retention.

"We found that retention rates and productivity numbers were much better in branch offices with formal continuing education programs," Thomson says. "Our PDP program is undergoing a transition driven by changes to our business model and changes in the marketplace. We're moving from a product- and services-based training program to a competency-based program."

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