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Merrill Lowers Key Comp Target, Again

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(Photo: AP)

Some three months after it lowered some performance measures affecting compensation for its Thundering Herd, Merrill Lynch said Monday it would further ease sales targets due to the COVID-19 pandemic. 

The changes should lower the number of Merrill advisors likely to see their pay trimmed by about 1,000, according to a Wall Street Journal report that cited a senior Merrill executive.

As of March 31, the advisor headcount was 17,646, up 111 from a year ago and 188 from the prior quarter. Average 12-month fees and commissions per advisor were $1.14 million.

“We recognize that some practices have been impacted,” said Andy Sieg, head of Merrill Lynch Wealth Management, in a note to advisors. “In response, we’re implementing modifications to limit your downside while preserving the upside.”

For instance, advisors need to add one new household credit by June 30 to prevent their pay from being trimmed by 1%; earlier in the year, this figure was two. 

Over the full year, this target now stands at three credits vs. four earlier in 2020.  

In 2019, the target was six household credits, which were awarded as follows: For client assets of $250,000 to $2.5 million, 1 credit; $2.5 million to $10 million, 2 credits; $10 million to $25 million, 3 credits; and over $25 million, 4 credits.

Advisors hit with a “growth grid” reduction in June can choose to push this pay cut back until Dec. 31. “This change allows you to avoid any near-term cash flow reduction and offers the opportunity to ‘course correct’ through the remainder of the year,” Sieg explained. 

In March, Merrill Lynch pushed back its requirement that advisors have at least 30% of client households in three different financial programs to qualify for the enhanced team grid incentive program from July 1, 2020, to Jan. 1, 2021.

According to Sieg, Merrill’s 2020 growth grid “retains all upside awards originally communicated in which an advisor may achieve up to a +3% cash grid award for the achievement of stretch hurdles in gained households and net flows.”

The firm says its advisors continue to add about 1,000 new client households per week.

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