When Salomon Smith Barney decided to slash the payout of lower-end producers, other firms took notice. Now A.G. Edwards is implementing a similar program.
Registered Rep. Magazine reported in January that five-year Smith Barney vets who produce less than $250,000 would receive a lower payout of 1%. Brokers viewed the “hit” as a wakeup call to lower producing representatives.
In July, A.G. Edwards reps will face a minimum production requirement too: brokers with more than five years in the industry who are producing less than $162,500 will get a five percentage point pay cut, according to a published report confirmed by A.G. Edwards reps.
“It’s designed to push us to increase business," an A.G. Edwards rep in the Midwest says of the internal memo that revealed the new requirements slated to begin in July. “It’s not a complete surprise. There’s been talk about this for a while. But rumors are rumors until they become fact. This is now reality. A lot of brokers here have become a little complacent. This is not such a bad thing [the new requirements]. Some reps need a little push to go and get new business. I see it here in my region.”
A.G. Edwards reps have been given six months advance notice on the implemention of the plan "in an effort to give those affected time to adjust their business," a company spokesperson says.
Besides wanting to give its reps a push to get new business, the new requirements are also the result of the firm investing “millions of dollars in technology and training,” according to a rep on the West Coast.