Merrill Lynch to Simplify Compensation Plan Task force addressing complex pay scheme. Changes to come next year.
Merrill Lynch has put together a task force to untangle the firm's broker compensation package. The goal is to make the plan "simpler and more straightforward," according to the firm.
Merrill brokers have been giving management an earful about how confusing the current compensation model is, says spokesperson Jim Wiggins.
The pay plan offers reps a bonus of 4% to 6% of gross production based on a complicated formula that rewards brokers who achieve net growth in client households with $250,000 or more that buy certain products (see December 1998 RR, Page 24).
Many brokers are leery of the firm's motives. "We're not sure if this is going to result in positive or negative changes," says a Merrill broker in the Northeast. "But it is definitely a hot-button topic. We have money coming in from so many different directions, it's hard to decipher."
According to one Merrill producer in the South, management told a broker advisory council in September that the goal of the overhaul "is not to reduce FC compensation, but to make it easier to understand and align with what's important in the direction of the firm." But this broker wonders if the move is an attempt to chip away at brokers' paychecks.
Apparently, retail chief Stanley O'Neal took one look at the compensation package soon after accepting his position in February 2000 and couldn't figure it out, this broker adds.
Wiggins says the task force won't make any concrete changes to the pay plan until 2002.