Merrill Lynch (BAC) has kept its pay grid pretty consistent since 2009, but this week it is unleashing a new grid on its 14,563 financial advisors.
The biggest change is a jump of $50,000 in the proposed payout grid ranges for fees and commissions of advisors with yearly production of less than $1.5 million. This is likely to impact many advisors in the Thundering Herd, given this year’s third-quarter average yearly production level of $1 million.
In other words, advisors who had fees and commissions of about $400,000 to $600,000 this year and had cash payouts of 40% will need to produce $450,000 to $650,000 in 2016 to maintain this same grid level. Thus, a $400,000 producing FA who couldn’t make the jump would make 5% less cash in 2016 — $152,000 vs. $160,000 in 2015.
(Merrill’s 2016 grid includes cash payouts of 34% of production to those reps bringing in yearly fees and commissions of under $250,000; 35% for those producing between $250,000 and $350,000; 38% for the $350,000-$450,000 range; 40% for $450,000-$650,000; 41% for $650,000-$850,000, 42% for $850,000-$1.05 million, and 43% for $1.05 million-$1.5 million.)
According to Merrill Lynch executives, who shared the compensation changes with FAs on Wednesday, higher production levels can be achieved by business growth tied to “deepening relationships” with clients, “bringing in new clients” and joining teams. More than 70% of Merrill FAs run their practices as part of a team.