NEW YORK Wells Fargo Advisors, which boasts the simplest pay structure among major broker-dealers, has raised the target on the revenue its brokers must generate to qualify for its 50 percent payout next year. As a sweetener, it added a bonus for gathering new clients and assets.
The unit of banking giant Wells Fargo & Co unveiled its 2013 pay plan to advisers on Wednesday. It raises the top payout hurdle to $12,000 a month from $11,000 this year, a spokeswoman confirmed on Thursday. Wells's 10,900 branch brokers will still receive an average of 22 percent of the total revenue they produce on any amount up to $12,000.
Wells also inched up the 50 percent payout goal last year.
Rival firms such as Bank of America's Merrill Lynch and Morgan Stanley require a much higher production goal before their advisers can retain close to 50 percent of the revenue they generate. They also have many more breakout percentages up to the highest level.
The 2013 Wells plan, however, mirrors those disclosed over the past week by Merrill, Morgan Stanley and UBS AG's U.S. broker-dealer in making only minor changes to the base compensation plan. The firms, engaged in a fierce recruiting battle for top brokers, do not want to create motivation for advisers to jump ship.
To stabilize their broker base, the firms have been making it easier for advisers to get quicker access to deferred stock and cash plans by introducing interest-free loans against the plans that are forgiven if they stay a certain number of years.
Wells's 2013 twist is a new loan-and-bonus structure for adding either key client households with over $250,000 of assets or bringing in a core amount of net new assets from existing or new clients. Those choosing the "key household" method can get upfront cash of as much as $100,000, the largest potential award Wells has ever offered, according to Erica Van Ross, the Wells spokeswoman. She did not specify the number of new accounts needed for an adviser to qualify for the top award.
The maximum bonus for hitting new asset targets is $40,000.
Several of Wells' rivals offered specific inducements this year for selling loans and other products that create regular fee payments unrelated to client trading. Wells includes some product-related inducements in its long-term deferred compensation program but did not make major changes this year.
"They are all implementing behavioral-based bonuses and somewhat reducing some standard plans to finance them," Andy Tasnady, a Long Island-based consultant on financial adviser compensation, said of the 2013 brokerage plans.
"Wells took some money out of their lending and financial planning incentive pool to reward new account and new asset growth."
(Reporting by Jed Horowitz; Editing by Jan Paschal)