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December 11, 2014 at 09:23 AM
There’s a new 80/20 rule for Bank of America-Merrill Lynch (BAC) financial advisors when it comes to clients with $100,000 to $250,000 in assets.
Keep these clients to less than 20% of your book of business, and you’ll get a 20% payout. If these “mass affluent” households represent 20% or more of your book of business, that payout will drop to zero in 2015.
Merrill Lynch required its advisors to add households with assets of $250,000 and up three years ago. At the time, existing relationships were grandfathered.
“We are now eliminating the grandfathering,” company spokesperson Susan McCabe said in a statement shared with ThinkAdvisor on Thursday. “Advisors still have the flexibility to have 20% of their book below $250,000 for strategic relationships, and they will be paid 20% on those relationships. Advisors with less than 80% of their books above $250,000 will not earn a payout.”
In other words, in 2015, Merrill is making another push for clients with less than $250,000 to use its Merrill Edge platform.
“Relationships below $250,000 are well served by our team in the Merrill Edge Advisory Center, as they are better aligned with this client segment and can provide the right service and coverage model,” McCabe explained.
Other Changes
Beyond the shift in how payouts tied to mass-affluent clients are treated, the core compensation grid for the Thundering Herd remains largely unchanged next year.
The wirehouse is, however, enhancing its strategic-growth award to further reward FAs bringing in new clients.
For instance, the base payout moves up from 10 basis points to 20 basis points when advisors add $10 million to $50 million in assets; these assets can be fee-based or tied to banking, lending and trust fee-based flows.
The payout triples to 30 basis points if this increase represents two or more net new households. The enhanced payouts jump an additional 3 basis points, if the new strategic flows top $50 million.
