Merrill Lynch’s well-publicized salary freeze is not as bad as it appears--at least for brokers.
Because of Merrill’s new compensation plan that kicks in next month, fee-based brokers are celebrating raises at the same time other employees, such as sales assistants and back-office staffers, are bemoaning the fact that their raises and bonuses have been frozen.
“We’re all affected by [the salary freeze] whether it’s direct or indirect,” says a Midwest-based Merrill broker. “Sales assistants and other employees are affected by the freeze. Spirit is down. We all feel it. It’s a difficult situation for people you work with.”
Merrill increased its payout on fee business for households with $100,000 or more in combined assets and liabilities 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.
“The salary freeze is hurting lower-level employees more than us and high-paid investment bankers,” says a Merrill broker in the South. But an East Coast-based rep from Merrill says he plans to give his staff “bigger and nicer [holiday] gifts this year to help compensate [for the loss of potential revenue through salary hikes and bonuses].”