Page 47 - Investment Advisor - December 2021

Merrill Moves to Trailing aren’t quite there yet; they will now have
until 2023.”
12-Month Advisor Comp Structure revenue for 2021 through the third quar-
Merrill Lynch Wealth Management’s
ter grew 19% from a year ago to a record
errill Lynch Wealth Management that an advisor loses into that advisor’s $4.5 billion and it saw record client bal-
M said in late October that it’s mak- net new asset flows for the year, which ances of $3.1 trillion, it announced in
ing no major changes to its pay grid for could have potentially hurt the advi- late October.
2022 but decided to move to a trailing sor’s ability to reach certain targets for
12-month grid structure and away from bonuses, the executive explained. A BREAK FROM COMP CHANGES
its retroactive comp structure in which The lack of a major change to Merrill’s
payout is determined based on the prior STRONG ADVISOR PERFORMANCE pay grid didn’t come as a surprise because
calendar year’s production. The decision to drop the Transfer Account published reports last month said Andy
The incentive grid “remains core to Policy was made because the firm’s advi- Sieg, president of Merrill Lynch Wealth
the comp program,” Merrill said. But sors have been “very successful in retain- Management, told an employees’ meet-
“advisor compensation will now be cal- ing accounts and “put a lot of effort into ing that the division planned no “large-
culated based on an advisor’s scale changes” to the pay grid
previous 12 months of produc- The trailing 12-month structure this year after changes made
tion,” starting Jan. 1, the com- over the past five years maybe
pany noted. “After each month, is “widely used throughout the “frustrated” its advisors.
the most recent 12 months of industry” and is a “positive” for The firm said in December
production will determine that last year that it eliminated pay
month’s grid payout.” advisors because it creates more to advisors on all client house-
The trailing 12-month struc-
ture is “widely used throughout “consistency” and “predictability” hold accounts under $250,000,
but left its core incentive com-
the industry” and is a “positive” in what they are paid, a senior pensation grid intact for 2021.
for advisors because it creates Performance hurdles for the
more “consistency” and “predict- Merrill executive said. wirehouse’s growth grid, mean-
ability” in what they are paid, a while, remained at the same
senior Merrill executive told reporters on it,” so the “appropriate [way] to recognize levels introduced in mid-2020, the com-
a conference Oct. 26. that effort [is] by not having a haircut,” the pany said last year. Under that program,
Meanwhile, no changes have been senior Merrill executive said on the call. introduced by Merrill a few years ago,
made to the firm’s growth or team grids. Ninety-five percent of advisors are if advisors bring in a certain number of
However, the firm said it is discon- “on track to exceed their production new households and net flow increases,
tinuing its Transfer Account Policy that results” from last year, while 86% of they get a 1% increase in pay, but if they
was enacted in 2018. “Currently, advi- them are on track to have their best year don’t reach the minimum hurdles, they
sors receive a 50% payout on their pro- ever, the firm said. get a 1% reduction.
duction on retained accounts for the first Sixty percent of advisors, meanwhile, The firm reduced the minimum
12 months,” the senior executive said. are “on track to bring in six or more new growth grid requirements in June last
“Beginning in 2022, advisors will receive households this year” and about 20% are year due to the COVID-19 pandemic and
100% payout on clients that they retain.” on track to bring in at least eight new those lower hurdles remained in place
Merrill also expanded the time in households this year, the senior Merrill for 2021, it said in December 2020.
which advisors have to keep clients who executive told reporters. Merrill also slightly tweaked its team
were transferred to them from six months In the team grid, 90% of qualified grid program last year, which factors in
to one year after hearing feedback from teams already met the firm’s new client an entire advisor team’s book. The client
advisors that the six months were not engagement standard for 2021, which engagement criteria was simplified and
quite enough to cement relationships requires 30% penetration across a broad moved to an overall book-level perfor-
with the new clients, the executive said. range of Merrill products, the executive mance view, after previously focusing
Starting in 2022, Merrill also won’t said. “We are planning to provide addi- on individual clients leveraging specific
factor assets from a transferred client tional flexibility for that final 10% that solutions, the company said.

DECEMBER 2021 INVESTMENT ADVISOR 45