NEW YORK (Reuters) – Bank of America’s Merrill Lynch Wealth Management stated on Thursday that beginning subsequent yr, it’ll give advisers extra credit score towards incomes bonuses for recruiting clients value $25 million than it’s going to for recruiting clients who’ve much less cash.
The agency’s 2019 compensation plan introduces a credit score system that rewards brokers with 4 credits for new clients who’ve $25 million or extra in belongings, three credits for clients with $10 million- $25 million, two credits for clients with $2.5 million – $10 million and one credit score for clients with $250,000 – $2.5 million.
It is an evolution from the carrot and stick strategy launched within the agency’s 2018 compensation plan, which rewarded brokers for recruiting extra new clients and penalized them, by docking their base pay, for failing to recruit a minimal quantity.
Andy Sieg, head of Merrill Lynch Wealth Management, stated the 2018 plan labored so nicely at boosting new shopper acquisition that Merrill is on the hook to pay its brokers greater than it deliberate.
“We are paying out more than we anticipated, and we are happy about it because we are seeing more progress on client acquisition and net flows,” Sieg stated on a name with reporters.
Sieg stated they anticipate to pay extra in general compensation once more in 2019.
“Our focus as a management team is to see that increase does not exceed the increase in revenue year over year,” he stated.
Like different Wall Street brokerages, Merrill Lynch pays its advisers a base quantity that may be a proportion of the annual income the dealer earns.
In 2018, the agency began giving advisers an additional % for rising internet new belongings by 5 %, and a further % in the event that they recruited 5 new clients value no less than $250,000 or two new clients value $10 million.
If advisers didn’t develop new belongings by at the least 2.5 % this yr, they misplaced 1 % of base pay and misplaced a further % in the event that they failed to usher in three new clients with $250,000 or one shopper with $10 million.
The internet new asset progress necessities stay the identical in 2019.
However, brokers could have to recruit wealthier clients to maintain their base pay. Brokers should earn at the least 4 credits, which could possibly be 4 clients with $250,000 or one shopper with $25 million.
Thus far in 2018, advisers recruited on common 5 new clients every.
Reporting By Elizabeth Dilts; Editing by Cynthia Osterman