Merrill Lynch distributed its new compensation package to its retail sales force Oct. 29. Brokers serving $100,000-plus households and converting clients over to asset-based pricing accounts will be rewarded.
Merrill jacked up its payout on fee business for households with $100,000 or more in combined assets and liabilities at the firm to a low of 35% and high of 50%. Money funds pay 50% to 56% for $100,000-plus households.
A $500,000 producer, for example, can expect to receive a combined payout (cash-plus-deferred compensation) of 46% on fee-based business, which includes managed accounts, Unlimited Advantage and C shares. That’s up from a 35% cash payout under the former compensation package.
“I’m going to make out like a bandit,” says one East Coast producer whose revenue is 83% annuitized. “I’m getting a 20% pay raise.”
Incentives to drop small households remain strong.
For households under $100,000, brokers at all production levels receive: 1) no payout on trades that generate less than $500 in commissions, 2) a reduced payout of 25% on transactions that generate $500 or more, 3) a 35% payout on all fee business, and 4) a 35% payout on money funds (compared to a 50% payout for producers selling money funds to households with more than $100,000 at Merrill). These reduced payouts remain in effect whether the broker services that small household himself or transfers the account to Merrill’s call center.
Merrill also threw in a few surprises: including increased payouts on large ticket transactions for $100,000-plus households, a new “growth account” in the deferred compensation package, stock options for club-level producers, the loosening of some golden handcuffs--plus a brand-new golden handcuff in the form of mortgage guarantees for members of a recognition club.
See the upcoming December issue of RR for more details and production grid.
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