Merrill Lynch has announced that it will offer fat bonuses for increased production — from either fees or commissions — in 2007. But, only certain brokers are eligible: Those who bring in at least $2.5 million in net new assets under fee arrangement.
According to published reports and an internal memo from Dan Sontag, head of Merrill's global private client group, under the new “Focus on Growth” bonus program, any broker who increases his production in 2007 will be eligible for a bonus of up to 30 percent of trailing 12-month revenue production. “To maintain and extend our leadership role, we need to continually raise the bar and reward outstanding performance,” said Sontag in the memo.
Merrill already has bonus programs that reward brokers for growth in client assets and fee-based business. But, according to the memo, brokers stand to earn a bigger bonus under the new plan. Indeed, a Merrill rep earning 45 percent in payout would be elated to take home 75 percent, as many of his peers at independent firms do, but it won't be easy. Reps with less than five years in the industry will need to ramp up production by 75 percent to get that 30 percent bonus, and veterans with 10 years or more experience will need to top their production by 30 percent to hit that high note, say sources familiar with the plan.
“That's going to be hard, especially for the older guys,” says one Merrill branch manager. “If you're doing $5 million in production, and we have a few of those around here, to get to $6.5 million something very big has to happen,” he says.