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How Merrill Lynch’s New Comp Plan Could Backfire

May 31, 2018

Wirehouse Merrill Lynch’s new compensation plan going into effect in June incentivizes its advisors and the wealth management unit overall to grow, which makes sense — but it could also have unintended consequences, recruiter Danny Sarch tells ThinkAdvisor.

The wirehouse’s new payout plan links payout not just to an advisor’s revenue but to asset and liability growth, the number of new clients an advisor brings on, and referrals to other units of Bank of America, Merrill Lynch’s parent company. Advisors who attain some new targets stand to gain a 2% increase in their compensation, effective through December. But advisors who don’t meet their targets could see their payout percentages cut in June — and for the rest of the year. And penalizing advisors whose assets shrink may not be the right move, Sarch tells ThinkAdvisor.

“Penalizing all [advisors] with a broad brush, no matter how or why the assets leave, is unfair … It’s way too harsh to judge assets [moving] in and out the same way,” he tells the publication.

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In fact, Merrill Lynch, as well as other wirehouses rethinking their compensation plans, should probably avoid antagonizing large producers who don’t necessarily want to grow their business every year, according to Sarch, ThinkAdvisor writes.

“Why begrudge them?” he tells the publication. “Every time you do, you risk losing these people.”

By Alex Padalka
  • To read the ThinkAdvisor article cited in this story, click here.