'Boring' Year Ahead for Merrill Comp Plan Changes, Exec Says

Despite the fact that new asset flows dropped in the second quarter, Merrill Lynch is not planning to tinker much with its compensation plans for 2020.

"We feel good about our [growth] trajectory," according to a senior Merrill Lynch executive, who spoke with the media after parent firm Bank of America released its earnings Tuesday.

With veteran advisors on track to add an average of six new households in 2019, "We're not anticipating compensation changes going into 2020. It's going to be boring," said the executive, who asked not to be named.

Growth Grid

Merrill made significant changes to its Growth Grid in late 2017 with the aim of getting advisors to add at least three new household accounts with assets of $250,000 or more in 2018; it not, the registered reps incurred a 100-basis-point cut in their payout.

That minimum hurdle grew to four new households in 2019. Also to qualify for a 100-basis-point bonus, advisors need to have six household "credits," which are awarded as follows: $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.

The Growth Grid targets an improvement of 5% or more over prior year-end balances, with a maximum hurdle of $15 million, for the bonus.

"Our shifts in compensation are in the rearview mirror. We are not expecting changes, full stop," the executive added.

Average trailing-12-month productivity (or yearly fees and commissions) for all 14,690 members of the Thundering Herd stands at $1.08 million. For experienced reps, though, that level is $1.4 million.

Asset flows for the quarter in the global wealth business were $5.3 billion, which is down about 50% from last year's $10.4 billion.

— Check out Merrill Says RIA Option Is a No-Go on ThinkAdvisor.