Why are you leaving so far into the program?  What happened?  I think Merrill will come after you for the money if you quit no matter where you go. 

I thought the same thing about the whole legal action when you leave. Somone told me that it's only if you go to a different firm. One of our other PMDs got fired a month ago and he didn't have to pay anything back. They want you to pay for the "training" the PMD program gave you. I think you'll be ok, but maybe you should think again before you leave. Why are you leaving? Two years in you must be making at least 80k+.

[quote=spike101x]

Two years in you must be making at least 80k+.

[/quote]

That's pretty funny, Spike!  Only if that were true...

[quote=Mr. Net New]

[quote=spike101x]

Two years in you must be making at least 80k+.

[/quote]

That's pretty funny, Spike!  Only if that were true...

[/quote]

Including salary of course... Here it's not a total draw. You get salary+ discounted PC payout+ yearly bonus+monthly bonus, so to make 80m in year two isnt super far fetched. I just went over the compensation plan :P.  If he's making less than 60m there's something wrong.

Just joking with you, Spike.  But, I understand the PMD comp plan.  (Quite well, actually).  And, no, it's not super far fetched - just doesn't happen much.  Let a little time pass there at ML and you'll see how the small household factor plays out with your comp. 

[quote=Mr. Net New]

Just joking with you, Spike.  But, I understand the PMD comp plan.  (Quite well, actually).  And, no, it's not super far fetched - just doesn't happen much.  Let a little time pass there at ML and you'll see how the small household factor plays out with your comp. 

[/quote]

Sh!t, I actually forgot about that for about 5 minutes. Thanks for bringing me down!

What is small household factor? Sorry I am starting the PMD program in a couple of weeks and would like to learn more about it so if you have any information that will help please let me know.

PC's on new households less than $250K in assets are not paid out.  The PC's will count for hurdle purposes while in the PMD program; however, the PC's do not count for actual cash payout from outearning your salary on a monthly basis or once you are out of the PMD program. 

So, ML charges the client - they just don't pay the FA on the business. 

a big thing to help with smaller households to get them over the 250+ wall is mortgages.

What Ulairi said is true. That seems to be the most viable way.

Adding a mortgage is not as easy as "would you like fries with that?”  Yes, for some clients a mortgage makes sense, it's a part of the holistic advisor protocol.  However, for many new client opportunities that would otherwise generate PC's when you are growing your book organically, a refi or a new mortgage is not feasible.  Furthermore, in the event a mortgage is suitable and they qualify, closing a mortgage is no longer a 30 day transaction.  It is a 60-90 transaction.  And, any PC's generated prior to the $250K mark are not retroactive after the first 90 days.  Assuming you make it out of PMD and have to survive only on PC's or if you are thinking you are going to out earn your salary through PC's while in the program, this policy matters a great deal. 

The problem with this new $250K small household policy is that many existing $1MM+ households started as sub $250K households.  Case in point, just this week there is a client that has maintained assets in the $100-150K level (does not have a mortgage), however the client is now retiring and has an additional $950K to transfer in from a 401K and taking a lump sum from a pension. 

Take this scenario under the current small household policy assuming you are on the grid and not receiving a salary.  One of two things would have transpired when this new client opportunity arose: 

1) You would not have taken the new account at all because you knew you would not be paid for your efforts for an unknown period of time.  (Bye, bye future million dollar household).  "I don't take those accounts..." as you high-five to yourself.  Nope, you'd rather starve because you now realize that because you gamed the system and took on small households while in PMD just to make the hurdles, you now realize that you're not getting paid on any of it...  It is naïve to think that this stuff doesn’t matter a great deal when the salary goes away and you are still not only trying to grow a business, but make a decent living?

2) You decide to take on the household and you do a great job of servicing this client knowing that there may be future opportunity for growth in assets on the account.  You're just not quite sure if it's going to happen in 1 year, 2 years or maybe 5 years?  However, during this two to five year period you would have received no compensation for your excellent efforts.  All the while, the firm has been reaping in thousands in revenue each year from your efforts. 

The situation is this: the million dollar producing FA's in your office have not always been million dollar producing FA's.  Many of them got where they are today by scraping by and "surviving" on the type of scenario that I just described for many years.  This type of account allowed them to get by and make an income while their business grew and they acquired the elusive million dollar households that we all aspire to have.  As their business grew the ubiquitous quote of ‘80% of my income comes from 20% of my households’ came into play.  And, THEN they made the smart decision to send those smaller households to Edge or a junior FA.  They are then left with only ~100 accounts averaging in size of $500K-$1MM in assets.  Great business. 

Building a million dollar practice is a process.  It is extremely rare to just go out and pick off 100 million households while shunning all "mass affluent" size accounts.  Part of the process is taking on the accounts that make sense (yes a great number of them being less than $250K initially), building a relationship with them, they then deposit more assets with you through money in motion events in their life, and refer other high net worth friends and family to you.  Eventually you have a huge business - you no longer need to have sub $250K households or do you want them.  But, this doesn't happen overnight.  Not for a new FA that doesn't have family money or Daddy working in the office next to them. 

Many new FA’s don’t understand how this new small household policy will affect them.  And, it’s not that the higher ups don’t understand what I have described – this is the program they devised and it’s working exactly as planned. 

I feel very strongly on this – there will be a change to this policy for lower LOS FA’s or eventual demise is evident. 

[quote=Mr. Net New]

Adding a mortgage is not as easy as "would you like fries with that?”  Yes, for some clients a mortgage makes sense, it's a part of the holistic advisor protocol.  However, for many new client opportunities that would otherwise generate PC's when you are growing your book organically, a refi or a new mortgage is not feasible.  Furthermore, in the event a mortgage is suitable and they qualify, closing a mortgage is no longer a 30 day transaction.  It is a 60-90 transaction.  And, any PC's generated prior to the $250K mark are not retroactive after the first 90 days.  Assuming you make it out of PMD and have to survive only on PC's or if you are thinking you are going to out earn your salary through PC's while in the program, this policy matters a great deal. 

The problem with this new $250K small household policy is that many existing $1MM+ households started as sub $250K households.  Case in point, just this week there is a client that has maintained assets in the $100-150K level (does not have a mortgage), however the client is now retiring and has an additional $950K to transfer in from a 401K and taking a lump sum from a pension. 

Take this scenario under the current small household policy assuming you are on the grid and not receiving a salary.  One of two things would have transpired when this new client opportunity arose: 

1) You would not have taken the new account at all because you knew you would not be paid for your efforts for an unknown period of time.  (Bye, bye future million dollar household).  "I don't take those accounts..." as you high-five to yourself.  Nope, you'd rather starve because you now realize that because you gamed the system and took on small households while in PMD just to make the hurdles, you now realize that you're not getting paid on any of it...  It is naïve to think that this stuff doesn’t matter a great deal when the salary goes away and you are still not only trying to grow a business, but make a decent living?

2) You decide to take on the household and you do a great job of servicing this client knowing that there may be future opportunity for growth in assets on the account.  You're just not quite sure if it's going to happen in 1 year, 2 years or maybe 5 years?  However, during this two to five year period you would have received no compensation for your excellent efforts.  All the while, the firm has been reaping in thousands in revenue each year from your efforts. 

The situation is this: the million dollar producing FA's in your office have not always been million dollar producing FA's.  Many of them got where they are today by scraping by and "surviving" on the type of scenario that I just described for many years.  This type of account allowed them to get by and make an income while their business grew and they acquired the elusive million dollar households that we all aspire to have.  As their business grew the ubiquitous quote of ‘80% of my income comes from 20% of my households’ came into play.  And, THEN they made the smart decision to send those smaller households to Edge or a junior FA.  They are then left with only ~100 accounts averaging in size of $500K-$1MM in assets.  Great business. 

Building a million dollar practice is a process.  It is extremely rare to just go out and pick off 100 million households while shunning all "mass affluent" size accounts.  Part of the process is taking on the accounts that make sense (yes a great number of them being less than $250K initially), building a relationship with them, they then deposit more assets with you through money in motion events in their life, and refer other high net worth friends and family to you.  Eventually you have a huge business - you no longer need to have sub $250K households or do you want them.  But, this doesn't happen overnight.  Not for a new FA that doesn't have family money or Daddy working in the office next to them. 

Many new FA’s don’t understand how this new small household policy will affect them.  And, it’s not that the higher ups don’t understand what I have described – this is the program they devised and it’s working exactly as planned. 

I feel very strongly on this – there will be a change to this policy for lower LOS FA’s or eventual demise is evident. 

[/quote]

Why do you think they'd actually change it or remove it? Like you said they get paid thousands a year and not having to payout 40% to the FA is more money in their pocket. The way they describe it that <250m households are more trouble than their worth and if you can't get that houshold above 250m there's a service issue. For seasoned FAs you're right this policy in negligable. Where I live the the average income is ~ 32m and annual savings are ~0. People mostly rely on the government for things. Growing up about 75% of the people here used food stamps or welfare. I've been out of the community for a few years and I know the place is growing pretty fast and there's much more money coming in, but I can't complain because the senior FAs are making money (mostly from clients aquired <2000). It's very unlikely to find a 250m household that's not taken. So like you said I'll probably starve for a while in order to keep my position. I hope they change this rule, but I doubt it. It's too juicy for them.

Hey guys,

Been in the program for about 2.5 months. Finished up my exams and go live in a few weeks. I am curious as to the most efficient way of maximizing PC's in order to hit the hurdles. How are you all charging your fees? What is the best strategy? Are you annuitizing in order to have a trail instead of charging up front in order to take care of yourself in the future? I really do not have a great understanding about how any of this works, so if anyone can simply explain any of this to me i woudl really appreciate it. I know that whether you do this the right way or not can litereally make or break you concerning the hurdles.

I am trying to build a fee based business. It will be harder in year 1 but will become easier as I go along. If you want to maximize your PC's just start slinging A shares. I am going to be doing some job fairs to do 401k to IRA rollovers and might be using mutual funds more for that than what I really want todo.

I am an LOS 34-month PMD... I am annualizing at about $175k in production with around 24mm under management. My advice to newbies is, be from money; if you aren't, then either be good at sales or learn to be good at it, befriend a senior advisor; even if they don't split biz with you it's nice to know that someone is pulling for you. Never listen to people who are negative- if you want the job bad enough, you will do whatever it takes to keep it, and you will.

Having said that, I look around and there are no PMDs left in my complex who started around the same time I did- they’ve all either left or gotten fired (most left on their own). When I think of some of the things I’ve had to do to stay in the program over the last few years, I can’t look back at everything with pride. I always wanted to be a “trusted advisor” for people; I was not one of the greedy ones…only tenacious and unwilling to admit defeat. Between the new account minimums and getting ready to graduate and realize I still have to face the same grind/uphill battle before I will make any real money (payout your first year out of PMD is 36% and at $175k in production u can do the math), a real sense of fatigue and disillusionment has started to creep in. I did it all on my own the last few years; no family money, no wealthy friends, no retiring senior partner, no major account distributions. I worked my butt off networking 4 nights a week, averaging 2 seminars a month…but as graduation and another minuscule paycheck stare me in the face, I can’t help but think, who am I working so hard for?

And to you handful of wildly successful PMDs out there (and I know you’re out there), I have all kinds of respect 4 u. I just think that what new PMDers really need is someone telling them to either have family money, hook up with a team, or content themselves with working hard for very little money for a 5-7 year period of time.

Fellow PMD'er here.

We have an FA who has an office who is making around $45K per year. He could make more as an assistant manager at Denny's. We have another FA who has an office who makes around $40K.FA #1 has been with ML >5 years. FA #2 has been with ML for ~5 years and prior to that was with a bank.

I really don't get it. Why stay at something and make such a small amount of money? Is it because you get to sit in an office, look at numbers on a screen and pretend you are Gordon Gekko? At that income you aren't even PeeWee Herman. PeeWee opened up a classic comics shop in Pennsylvania and makes pretty good money.

I am well into the program but not near the end. I see people come and go and I ask: what did they get out of this? They got licensed. Other than that they got... what? They are mostly broken and bitter when they leave. Whatever assets they acquired are passed around the campfire.

I have never seen a single new hire that I didn't think could not make a career at ML. But, the only ones that appear to be on that track are inheriting books. Their impending success is not based on their own hard work. It is based on being born into the right gene pool. Are there exceptions? I'm told there are, but I've never met one in an actual face to face meeting.

[quote=Nonplussed]

I am an LOS 34-month PMD... I am annualizing at about $175k in production with around 24mm under management. My advice to newbies is, be from money; if you aren't, then either be good at sales or learn to be good at it, befriend a senior advisor; even if they don't split biz with you it's nice to know that someone is pulling for you. Never listen to people who are negative- if you want the job bad enough, you will do whatever it takes to keep it, and you will.

Having said that, I look around and there are no PMDs left in my complex who started around the same time I did- they’ve all either left or gotten fired (most left on their own). When I think of some of the things I’ve had to do to stay in the program over the last few years, I can’t look back at everything with pride. I always wanted to be a “trusted advisor” for people; I was not one of the greedy ones…only tenacious and unwilling to admit defeat. Between the new account minimums and getting ready to graduate and realize I still have to face the same grind/uphill battle before I will make any real money (payout your first year out of PMD is 36% and at $175k in production u can do the math), a real sense of fatigue and disillusionment has started to creep in. I did it all on my own the last few years; no family money, no wealthy friends, no retiring senior partner, no major account distributions. I worked my butt off networking 4 nights a week, averaging 2 seminars a month…but as graduation and another minuscule paycheck stare me in the face, I can’t help but think, who am I working so hard for?

And to you handful of wildly successful PMDs out there (and I know you’re out there), I have all kinds of respect 4 u. I just think that what new PMDers really need is someone telling them to either have family money, hook up with a team, or content themselves with working hard for very little money for a 5-7 year period of time.

[/quote]

I think you nailed it. I am in the program and everyones production  at our office is made public. If you survive the program you are basically at 60-70k and that is if you worked your ass off with no help. A few might be making 80k but those are far and inbetween and usually ahd some lucky breaks or help.

As for OP’s question of ML coming after you. Did you actually sign the agreement to repay training costs? I looked over all the documents I have had to sign and nowhere is that mentioned. Not sure if it differs by state but I don’t know any of the guys that had to sign it and as you know tons leave the program all the time.

Hi, yes, I signed it. There have been PMDs in my complex leave at all various LOS months; some were fired, some left to work doing something else, and 2 PMDs in my complex (between LOS 18-30 months in) were actually recruited by the competition to go work in their training program. To my knowledge, ML never came after any of them to recoup the training costs, and they all signed the agreement. I kept in touch with the 2 who went to work at the competitor, just to see. Hope that helps.

[quote=Nonplussed]Hi, yes, I signed it. There have been PMDs in my complex leave at all various LOS months; some were fired, some left to work doing something else, and 2 PMDs in my complex (between LOS 18-30 months in) were actually recruited by the competition to go work in their training program. To my knowledge, ML never came after any of them to recoup the training costs, and they all signed the agreement. I kept in touch with the 2 who went to work at the competitor, just to see. Hope that helps.[/quote]

I've never stayed in touch much with PMD's who left but I've had a question. For those who were terminated was it done in such a way that they could receive unemployment?