Merrill Lowers Goalposts for “Client Engagement” Bonus
Merrill Lynch Wealth Management is making it easier for brokers and teams to qualify for a “client engagement” bonus aimed at selling more bank products to their customers.
Merrill Lynch Wealth President Andy Sieg told employees Monday that they will have more time to hit their sales goals and also receive credit for products that previously did not qualify, including core Cash Management Account and customer mortgages that advisors didn’t originate.
“We believe these changes will help advisors and teams achieve the program’s objectives by providing additional time to reach the benchmark and more flexibility in options available to gain credit for expanding client relationships,” Sieg wrote.
The decision indicates that brokers were complaining of being pulled in too many directions, having to hit new account growth bogeys to avoid payout penalties at the same time that they were being pushed to sell more Bank of America loans, mortgages, deposit accounts and fee-based investment products to existing customers, said people familiar with the change.
The changes affect the so-called Client Engagement Program (CEP) that Merrill introduced in its 2019 compensation program. The CEP pays brokers 14 basis points on client checking and savings account balances (up from the core 4 basis points) if 30% of their clients use at least three services (trust accounts, loans, checking accounts and the advisory platform) and two digital services (e-delivery, mobile apps and other online programs).
Team members must hit the CEP targets in order to qualify for the payout grid that pays each advisor at the level of the highest earner in the group. Qualified teams will now have until July 2020 to hit the 30% engagement goal, six months later than the original deadline. (Merrill earlier this year lowered the customer engagement bogey to 30% from 40% of household accounts.)
Merrill also is allowing CMA accounts opened in 2018 or earlier to meet the breadth-of-relationship requirements, as well as first mortgages and home equity lines of credit that were not referred by advisors. Most Merrill clients use CMA accounts.
Also, new households added to meet the growth requirements will not count in the 30% calculation, according to Sieg’s memo that directly addressed complaints that not enough brokers could meet the award requirements.
“Now that we have reached midyear, we are making adjustments based on both the program’s progress and the responses we have received from field leaders and advisors,” Sieg wrote.
The firm in January also loosened targets for brokers in “community” markets more than 10 miles away from Bank of America branches, giving them double credit for satisfying lending or checking criteria.
Merrill has lost several large-producing teams in recent weeks to smaller firms and to wirehouse rivals such as Morgan Stanley, just weeks before the first phase of the payout clawback takes effect for brokers who fail to generate at least four new household accounts.
Sieg is not backing off of the growth program, saying last month that there is ”room to run with this strategy.” The so-called growth grid pays an extra 100 basis points to brokers who generate six new household accounts over $250,000 but deduct 100 basis points from those who generate fewer than four new accounts.
Merrill also is deducting the first 3% of a broker’s monthly production from his or her payout calculation this year because compensation was growing faster than revenue, Sieg said earlier this year.
Rearranging deck chairs on the Titanic…
This is hilarious! He is easing a program to allow more Advisors participate in a “client engagement program” (sales contest, someone should tell FINRA) to sell more bank products, therefore making clients more sticky for Bank of America to stay IF U leave. I know that some advisors are dumb to fall for this trap, but hey if they stayed so far……
Lol funny. Non stop circus over there. What’s next promising the client no AUM fees if they open a checking or CC account after their advisor leaves the firm.
Clearly the program was not producing the desired results that they had to adjust it. Make no mistake this was not done for the benefit of the FA as they will attempt to spin. This was changed in hopes of getting another 10% of the sales force to “buy in” and push more cross selling. One can only assume results in programs like this are pegged to Andy’s comp as he constantly changes the rules in the middle of the game.
I feel for the good advisors at this once great firm. Those of us that have moved on know how you want to believe it will get better. You try to convince yourself that the Merrill you grew up in can make a comeback. Unfortunately this is no longer Merrill Lynch and never will be again. This is Merrill a BANK OF AMERICA CORPORATION. I wish you all well and know you each need to weigh your individual circumstances and pros and cons.
Well Said Bye bye bully!
I am not joining others who are predicting the total demise of Merrill, but this latest move does look a bit like desperation and the recognition by senior management that the CEP (or what I like to refer to as the Client Entanglement Program) may have triggered a exodus of advisors. The other devious little tool being used by Merrill to lock advisors into place, the CTP (a.k.a. Clients Totally Pilfered) is something at which advisors need to look very closely. It definitely works in the firm’s favor, especially when compared to going independent a year or so before retiring and then selling one’s book. The plan deliberately makes it easier to just fade off into the sunset with some cash, but it is the lazy way out and requires leaving a LOT of money on the table, including the loss of being able to sell and only pay long-term cap gains instead of full, ordinary income tax rates on the proceeds.
Ron, I love your creativity as it relates to Merrill’s alphabet soup program titles. Those made me laugh!
Merrill Advisors probably already know this, but if you put your clients into a B of A mortgage, you will only have negative repercussions from the horrible service that they provide and you will be on the receiving end of client complaints. About 10 or 15 years ago, when Smith Barney was part of Citibank, I took the carrot and it was a regrettable mistake. You are better off taking the pay cut than to sell any of the bank products. Maybe B of A provides better product and service than Citibank, l but I wouldn’t trust any of them. They are all cut from the same mold: greedy, stupid, and unethical.
Everything was great on analyst day earlier in the month. Now, not so much…. ML has become a shell game of broker headcount, broker productivity and firm strategy. What is missing is visionary leadership. They sold cross selling to “customers” to their analysts a decade ago and will do anything to count incidents of referrals. The firm that we all loved is long gone. Fortunately, so am I. Celebrating four years of independence after an exceptional career with the firm formerly known as Merrill Lynch. Life is too short.
Lost in all of this is the rhetorical question of, “Who cares about what’s in the customer’s best interest?”
As a current ML self-directed client and frequent trader, I’m aware of this Vietnam War-like emphasis on body counts and stuffing a client with as many products as possible. I ignore every unsolicited call from ML, knowing that all they want is to cross/up sell. I neither have the time nor desire to listen to sales pitches. That’s the entire reason I went self-directed in the first place. Well, that, and not trusting anyone else to decide what happens with my money.
Wall Street has constructed a fee-based economy because of one simple fact: they can’t beat the market’s rate of return over the long haul.
Then why the hell are you here? Why do you care what ML does since you have it all figured out! What a tool! Obviously a washed up broker that could not make it in the business!
Wow, you’re such a smart and independent lad now aren’t you? Trump 2020 (yeah baby!) has it right, you’re a clownish tool. A YUGE tool. ‘Self-directed’ is code for tiny account and a level of self-righteous arrogance that nobody has the time or patience to deal with. Tool be gone!
Well, the leeches like you and Trump2020 don’t take long to show themselves, do they? If you idiots had any real money of your own, you wouldn’t need to sell a bunch of crap and collect fees from others. It’s people such as yourselves that engender mistrust in the entire financial system. Fortunately you guys are a dying breed and are eminently replaceable. Leech on while you can, baby!
Self-directed is a bitter, angry man. He got bounced out of a training program and now hates the industry. But…he’s smart enough to be “self-directed”. Bully for him. A sad cat.
No, I learned my lesson during the crash of 1987 not to trust financial industry fools. That lesson has served me well ever since. I’m retired now and trading full time. Maybe one day you’ll acquire the skills allowing you to do the same instead of ripping off sell-side customers through your own conflict-of-interest self-aggrandizement.
Cool it “self directed.” There are two types of people: those that change their own oil, and those who outsource it because they don’t have the time, interest, or know how to do it themselves. Not all advisors are pikers as you suggest, and not all investors want to do it themselves.
Why are you even on a site geared towards advisors in the first place? Get another hobby!
I’m a ML client, so that’s how I initially tripped over this site. It is in my best interests to keep up with changes that are afoot to see where the firm is heading and their “focus du jour” so to speak.
The entire industry needs to take a step back and look at how they’re conducting business. With all the focus on bonuses, and euphemistic terms such as “client engagement” (sales!!!), etc., the core purpose of serving the customer gets lost. Instead of focusing on making clients money and therefore the firm money, the current perspective is grab all we can grab to get our bonuses and spiffs, without caring what happens to the client.
The good advisors leave pressure cooker environments like that and do things the right way. I have no problem with them, and my disdain is not directed toward them. Can’t say the same about the churn and burn crowd and the companies that foster that kind of behavior. It’s disingenuous.
The fact that I’ve hit a raw nerve here tells me everything I need to know about current industry practice. Hasn’t changed in decades, but rest assured, change is coming. It’ll take time, but AI is going to put a lot of you out on the street. I will not shed a tear when that happens.
This would seem to convey two things are going on at ML:
1: ML FA’s either can’t or don’t want to sell their clients more crap.
2: ML FA’s are having a very difficult time landing new clients (which are usually the easiest to sign up for all this extra crap).
Ha ha ha! Yeah that will stop the exodus of FAs from leaving Wells Fargo Redux. “Hey will still want you to act like a bank teller but we are giving you an extra 6 months to do so”. If you’re still at Merrill leave now.
The 6 month delay is another one of Andy’s missteps. Make no mistake it won’t go away it is just delaying the inevitable. The list of those clients on an FA book with no loan or BAC accounts was long and with retired clients getting them to move to a BAC account for their social security deposit was not going to happen. The scorecard Andy has consists of new BAC checking accounts, new HHs (which leads to more opportunity to cross sell) headcount and referrals to the bank. Our office manager sent us an email that was sent to their clients about new loans and refi’s and how successful the manager was in getting more referrals. First it is RD tactic number 1, fib about it, and second it is code for we are way behind on referral to the mortgage team so you better get going. Also find any ML FA team with a graduated TFA that is female, who wants to change them either back to IA ( the manager probably got them off the FA payroll and added a new hire 3 years ago) or convert someone who can never bring in a HH since they were not hired for that 3 years ago and the managers are telling the FA, nope can’t do it. Why? That is a loss of a diverse FA headcount AND THAT’S BAD AT BAC. But Mr. FA we don’t care how it impacts your business just keep getting us referrals and checking accounts. As on division executive said on a summer intern call “ we have too many older bald white guys as FAs. Guess subliminally he was referring to Andy!