Salomon Smith Barney brokers who produce less than $250,000 and have been in the business for five years or more will receive a lower payout of 1%, according to brokers familiar with the compensation change.
The 1% hit is viewed by brokers as a “wakeup call” to lower producing brokers.
“This is a smart move by the company,” says a Smith Barney broker in the West. “The smaller producing brokers will be weeded out if they don’t get going, and bigger producers will get more assets. Fees are coming down, the industry is becoming more competitive and margins are being squeezed. So if a broker isn’t pulling his weight, it’s time for them to think about doing something else.”
“This is an industry where the strong survive and the weak fall by the wayside,” says an East Coast producer.
Salomon Smith Barney did not respond to a phone call to request a comment on the 1% paycut.
This move by Smith Barney follows on the heels of its recently announced elimination of bonus payments on annuity trails, which upset the firm’s reps. By eliminating the bonus on trails, a broker producing $125,000 to $150,000 in annuities will have their gross commission slashed by $12,500 (12%).