Merrill Gives Some Brokers Leeway on BofA Product Incentive
Merrill Lynch acknowledged this week that some brokers far from a Bank of America branch may have a hard time selling loans and checking accounts to their customers.
In a memo sent Wednesday to advisors and managers in offices located more than 10 miles from a BofA consumer bank branch, the company said it will loosen a sales goal that qualifies them for higher pay on customers’ checking and savings account balances.
The brokerage giant is raising payouts to brokers who provide “integrated wealth management, banking and lending capabilities to their clients” this year to .14% of client bank account balances from .4% as part of its continuing attempt to “deliver the [BofA] enterprise,” according to Merrill’s 2019 compensation plan.
To qualify, at least 40% of a broker’s clients must use three of four “core” products and services—a fee-based investment advisory program, a trust and/or insurance product, a loan and a checking account. The revision received by brokers in remote markets this week gives them a double credit for clients who satisfy either the lending or checking account criteria. That means they will have to sell just one other service to 40% of their clients.
“The changes we announced were based on advisor feedback,” said Merrill spokesman Jerome Dubrowski. “When we make changes to the compensation program we collect feedback and, if we feel an adjustment needs to be made, we work with the various stakeholders to adjust.”
Merrill has made no announcements about tweaking the more controversial parts of its compensation plan. It is not paying brokers on the first 3% of monthly revenue they produce in what it said is an attempt to keep compensation growth from outpacing revenue growth. It also has increased the number of new accounts brokers must generate annually to retain their 2018 payout rate percentages.
Dubrowski declined to say how many of the firm’s approximately 14,800 advisors will qualify for the double-credit on bank products.
Merrill has segmented about 100 branches with some 1,650 brokers into a new “community markets” sector, based partly on remoteness from a BofA branch. The brokers may have been finding it more difficult to “deliver the [BofA} enterprise,” as the client engagement program is described in the compensation plan.
In addition to selling three of the four “core client solutions” to qualify for the “client engagement” award (the Investment Advisory Program and trust/insurance criteria will continue to count as one credit toward the goal), brokers must ensure that at least 40% of their clients also are “digitally engaged.”
That means a client uses features such as a bank or brokerage mobile app or accepts e-delivery of documents, according to the compensation plan.
The memo to remote-market advisors, signed by “strategic performance executive” Kirstin Hill and “advisor compensation executive” Tim Shook, did not address whether advisors with high concentrations of digitally unsophisticated clients will receive clemency.
-Jed Horowitz contributed to this story.