Bank of America-Merrill Lynch (BAC) financial advisors compensation packages for 2013 is mixed bag for advisors, compensation experts say.
On the plus side, retiring advisors can potentially receive between 100% and 160% of their trailing-12-month production over a four-year period, which is up from 70% to 80%. Also, the pay grid stays the same.
However, a new emphasis on flows of certain types of asset flows–namely fee-based assets rather than overall net new money–is not likely to make all of the 17,000-plus Thundering Herd happy.
“There is a revision to the bonus plan that could make it actually harder to earn the initial amounts,” said compensation consultant Andy Tasnady, in an interview with AdvisorOne. “Not all assets count, namely non-fee based assets like cash, bonds and equities that are not in certain wrap arrangements.”
(The number of BofA-Merrill financial advisors stood at 17,533 as of Sept. 30, which is down one from the second quarter but up 439 reps from a year ago. These figures include financial advisors in the mass-affluent Merrill Edge platform and others in BofA’s Consumer & Business Banking segment, which totaled 1,457 in Q3’12; 1,383 in Q2’12; and 1,032 in Q3’11.)
While lending is now part of the bonus program, those advisors who aren’t likely do more borrowing “could find it harder to hit” the new targets, Tasnady explained.
BofA-Merrill says it is focused on “strategic [asset] flow growth by broadening and strengthening client relationships and utilizing the full capabilities of Merrill Lynch and Bank of America.” This includes boosting fee-based assets, banking, lending and other annuitized products to “align client, advisor and shareholder interests.”
Total client balances in BofA’s Global Wealth and Investment Management rose 3% in the prior quarter to $2.3 trillion in the third quarter, led primarily by market gains, as well as gains in deposit balances, long-term assets under management flows and loan balances.
Asset flows to advisors in the third quarter were $3.83 billion, down from $3.99 billion in the second quarter of 2012 but up sharply from $1.93 billion in the year-ago quarter. For the first nine months of 2012, new assets totaled $15.64 billion vs. $10.19 billion in the same period of 2011.
The new growth awards will be available to those advisors who raise assets flows by 10% or more and by at least $5 million. For the first $10 million, the reps will get a bonus of five basis points (or 0.05%). And they get 10 basis points (or 0.10%) for over $10 million and up to $50 million.