Merrill's PC comp system

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Jun 9, 2006 9:06 am

Do you Merrill guys get pissed because your payout isn't based on the firm's gross profit before they take 68% of what they choose to credit you with?  Instead of Gross Dealer Concession, they pay you based on "Production Credits."  Essentially they take a small haircut, then they take a bigger haircut, and the client pays the same as at a GDC joint.

Is this a dissatisfier with you guys at Merrill? 

Is it just like that at any other wirehouses?

Jun 10, 2006 1:21 am

So I guess no complaints, hah.


Jun 12, 2006 7:02 am

No- That does stink…but not all platforms have this structure. 
If you get approved to be a portfolio manager, you charge between 1.5%
and3  % (depending on your choice of discounting) and your PC’s
are the same as the fees the client pays.  1:1.  That hits
your grid.

The 68% you speak of is managed money (Consults) I assume. 
Remember sport, your not doing anything here.  The client pays
1.8%, you get 68% of that, the 32% goes to the money manager that is
dong all of the work.  You still keep 1.2%.  If you don’t
like it, charge the 1.8, run the money yourself in the afore mentioned
program, and keep the whole thing to grid.

The bad haircusts come in the wrap programs (MLUA).  Here you take
a cut if the HH is under $250K, but this is to promote platforms that
are getting less scrutiny from the SEC as appose to the fee in leu of
commissions that are sold as advisory accounts.

As for C shares, they pay a 1% trail, your PC are 1% to grid. 

Lastly the mutual fund wrap program (MFA) is 1.25% to the client if you
pick the funds, and you keep the 1.25% to grid.  If you want the
program to manage the fund selections it is 1.5% to client, you keep
1.25%.  A haircut yes, but you are not doing anything so you are
doing less so you get paid less.

Just remember what the cost of your work station would be if you were
to purchase all of that yourself, plus phones, etc…  Then use
the work startion to look at your MER stock and that should make things
feel a little better.