Dec 10 Bank of America Corp is ramping
up its incentives to encourage advisers to convince their
clients to take advantage of more of the bank's offerings. The
firm is also sweetening incentives for advisers to keep the
client money they manage at the firm once they retire.
In its 2013 compensation plan, announced to advisers Monday
afternoon, the company outlined plans to remove the cap on
awards offered to advisers for bringing in more fee-based
assets, as well as other banking, lending and annuitized
Merrill also increased the expected payout for advisers who
keep their client accounts at the firm after they retire. Often,
brokers will become independent advisers or sell their books of
business to an independent advisory firm, pulling hundreds of
millions of dollars in assets away from the brokerage firm.
Veteran advisers generally manage a bigger pool of assets at a
company and keeping them provides a needed source of revenue.
The changes come as wealth management businesses are
increasingly seen as a key revenue driver for many major Wall
"What they're doing is trying to get advisers to diversify
their client assets beyond the traditional Merrill Lynch product
offering," said Mark Albers, a former Merrill complex manager
who now runs his own firm, Albers & Associates Consulting. "It's
obviously their attempt to ... leverage the rest of the bank."
Bank of America acquired Merrill Lynch in early 2009 in the
midst of the financial crisis. Since then, though, advisers have
sometimes bristled at feeling pressured to pitch bank products
and answer to clients about their concerns over their parent
The Strategic Growth Award, now uncapped, will shift the
focus for earning the bonus more towards growth in areas such as
fee-based assets and lending, rather than simply increasing net
new money, previously a pillar of the award.
"It forces them to put (the assets) to work in order to be
compensated," Albers said. "The firm makes money by having
assets that are invested in fee products."
So, for example, if an adviser were to bring in a $10
million account all invested in Treasury bills, which are not
fee-based assets, those new dollars will no longer count towards
In an effort to keep client assets at the firm, Merrill also
increased its cash payout for advisers who leave their client
accounts with the firm once they retire.
Advisers can now expect an average cash payout over four
years of between 100 percent to 160 percent of their annual
production, up from an average of 70 percent to 80 percent.
The payout is offered as a part of a Merrill program geared
towards advisers 55 and older once they leave the business. That
incentive could help Merrill hold onto valuable client assets of
veteran advisers - those who have been with the firm for a
couple of decades - who often decide to go independent before
retiring in order to "monetize" their books of business and sell
it for a higher payout than traditional brokerages might offer.
"Recruiters use that as a recruiting tool," said former
Merrill branch manager Brad Stratton.
Merrill did not make changes to its payout grid, which
refers to the chart used by brokerage firms to determine the
main way advisers' get paid. Morgan Stanley and UBS also did not
make changes to their grid.
Merrill also maintained its controversial $250,000 minimum
client account size - the minimum value of a client account in
order for an adviser to be paid commissions or fees on the
account. It was introduced last year in a move to motivate
advisers to focus on higher-net-worth clients. The bar was
increased from $100,000, which is still the minimum account size
that advisers at Morgan Stanley are paid on. UBS kept its
minimum account size at $75,000.