Merrill Rallies Top Advisors to Cheerlead 2018 Comp Plan
Merrill Lynch circulated an unusual memo on Tuesday to all employees in its wealth management business, urging them to embrace their leaders’ push to open new accounts and to feel “energized” by a new compensation plan that rewards its almost 15,000 brokers if they grow customer lists and assets annually and earn less if they do not.
Titled “Embracing Growth at Merrill Lynch,” the memo was signed by 28 “high-growth” brokers who wealth management head Andy Sieg and his right-hand “client development” aide Steve Samuels have coalesced into a group called “The Advisor Growth Network National Committee.”
“[W]e’re confident Andy’s focus on ‘responsible growth’ is right on target,” the memo said, citing the two-word growth mantra frequently invoked by Bank of America Chief Executive Brian Moynihan. “Frankly, it’s invigorating—core to why we got into this business and what has made us successful to this point. It’s healthy for the company—energizing the culture and driving innovation. It’s truly Merrill Lynch.”
Several advisors, who spoke on condition of anonymity, said they viewed the memo as an attempt to counter grumblings about the parent bank’s attempt to reach into their wallets with the new comp plan and further interfere with the broker-centric culture that existed at Merrill before the bank’s takeover in the heart of the financial crisis.
When Merrill announced its 2018 plan earlier this month, it noted that its average broker had opened just two accounts this year and less than one when client attrition was tallied in. The new plan generally requires brokers to add three new households and grow money that customers keep with the firm or the bank by 2.5% to receive the same payout percentage as in 2017.
The Wall Street Journal published a story on November 16 chronicling complaints from some veteran, unnamed brokers about the difficulty of building their books to meet the new targets.
“We’re convinced the compensation plan for 2018 squarely incentivizes responsible growth, especially the most important kind: new client acquisition,” the memo said. “It’s just one more tool that influences how we prioritize our activities.”
Richard Pluta, a 33-year Merrill veteran who is chairman of the Advisor Growth Network (AGN), said the vast majority of the firm’s brokers are sympathetic to the compensation plan and other motivational efforts that Sieg has initiated.
“There are advisors that for the last five years have not established one new account and are in a comfort zone, and there’s not much of a conversation to be had there,” he said. “We are trying to motivate and inspire those that are still committed to the business.”
Brokers understand the industrywide problem of low “organic” growth, and most at Merrill appreciate the firm’s efforts, he asserted.
“It’s not like I’m drinking the Kool-Aid,” he said. “It doesn’t take much just to stay flat with last year on the comp plan.”
As part of its motivational efforts, the AGN leaders vowed in the memo to “share, peer-to-peer, the growth techniques of our most effective advisors” through monthly conference calls and a new “Bull Horn” website, and to “always have someone from the national AGN get back to you expeditiously. “
The broader network of high-growth brokers includes around 400 individuals, with the 28 national committee members chosen because of the “tremendously” high number of new accounts and assets they add each year, according to Pluta, who said he co-authored the memo with Samuels.
“We need to right the ship,” he said. “We’ve all taken our eyes off of growth.”