Bank of America – 2021 Comp: Merrill Retains Grids Intact, Eliminates Pay on Small Accounts

December 3, 2020

wolterke | stock.adobe.com

Merrill Lynch Wealth Administration on Thursday advised its 14,000-plus advisors that it’s retaining their grid hurdles, payouts and development necessities unchanged in 2021 in recognition of the powerful pandemic setting, however will finish pay throughout the board on sub-$250,000 family accounts.

The Bank of America brokerage agency additionally has recalculated some shopper gross sales hurdles to make it simpler for brokers on groups to qualify for larger pay, whereas reducing in half their compensation on money-market and different shopper cash deposits to mirror rock-bottom rates of interest. It additionally dissatisfied some brokers by retaining its coverage of not paying them on the primary 3% of month-to-month charges and commissions collected from shoppers.

Merrill’s determination to maintain the core payout elements of its 2021 compensation plan unchanged meets the expectations of consultants who forecast brokerage companies could be reluctant to rile producers with beefed-up development and product objectives because the Covid-19 pandemic continues to rage and most advisors proceed to work at home.

“In an environment less than normal, we thought it was very important to maintain stability,” stated a senior Merrill Lynch government who spoke on situation of anonymity. “We have made minimal changes, and the few we made align with our long-term growth strategy.”

Merrill in June lowered its new shopper account requirement to a few households a 12 months from 4, and stated Thursday that it’ll hold the Covid-adjusted degree in place for 2021. Below its “growth grid,” advisors who miss the goal will proceed to be penalized with a 1% discount of their revenue-based payout whereas those that add six or extra households over $250,000 get a 1% payout bonus. (Merrill advisors are on observe to usher in over 20,000 internet new households in 2020, beneath the pre-Covid goal.)

Merrill’s development grid additionally consists of awards and penalties for annual internet new property brokers add, requiring at the least 2.5% year-over-year development to keep away from a 1% payout lower and 5% development for a 1% bonus. Internet new property throughout Bank of America’s wealth companies plunged within the third quarter, however Merrill has not adjusted its new-asset development targets for brokers this 12 months or subsequent.

The agency in 2021, nonetheless, will strengthen its antipathy to having brokers service sub-$250,000 accounts. It would give 0% payout on credit for these accounts, down from the 20% penalty payout charge it has had since 2012. Brokers with greater than 20% of shopper accounts beneath $250,000 already get the zero payout, however the brand new coverage is worrying some novice advisors in Merrill’s coaching program and in its small neighborhood markets sector.

The Merrill official shrugged off the considerations, saying that its wealth administration brokers have weaned themselves from the so-called mass prosperous for the previous decade (although the sector is serviced by Bank of America’s Merrill Edge advisors). The common new family account is being opened with about $1.Three million, and current accounts common nearly $Three million, the official stated.

Merrill’s 2021 plan additionally will slice to 2.Zero foundation points from 4.Zero foundation points the payout credit brokers get on cash deposits in bank and brokerage accounts, cash market funds, and bank and brokered certificates of deposits. The lower displays the low rates of interest which might be devastating internet curiosity margins industrywide, Merrill officers advised advisors.

On the plus aspect for brokers, the agency is altering the methodology for a key criterion figuring out when all brokers on groups can qualify for the payout given to the group’s highest producer. Each group member presently should be sure that at the least 30% of his or her shoppers have three of the next 4 “solutions”: A payment advisory account, a belief and insurance coverage product, a loan and a (BofA) checking account. Below the 2021 plan, each group member will meet the hurdle if 30% of the group’s ebook of shoppers meet the requirement.

The adjustment ought to enable greater than 80% of groups to qualify, up from about half presently, the Merrill official stated. The lion’s share of Merrill Wealth’s brokers work on groups.

Morgan Stanley has not but introduced its 2021 compensation plan, however lifted the grid income hurdles on its 2020 plan in October, after a short lived delay in acknowledgment of pandemic constraints. 

Wells Fargo Advisors’ 2020 plan lowered payouts on sub-$250,000 accounts to 20%, a penalty that it beforehand had imposed solely on accounts below $100,000. Wells has not but introduced its 2021 plan. 

-Mason Braswell contributed to this story.