Merrill Rallies Top Advisors to Cheerlead 2018 Comp Plan
Merrill Lynch circulated an unusual memo on Tuesday to its wealth management employees, urging them to embrace their leaders’ push to open new accounts and feel “energized” by a new compensation plan that rewards its almost 15,000 brokers if they grow customer accounts and assets but penalizes them with lower payouts 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 anointed as Merrill’s “Advisor Growth Network (AGN) National Committee.”
“[W]e’re confident Andy’s focus on ‘responsible growth’ is right on target,” the memo said, citing the two-word mantra frequently invoked by Bank of America Chief Executive Brian Moynihan, as well as by Sieg. “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 and the new growth network as a defense against grumblings about the new comp plan and growing resentment about BofA’s reshaping of Merrill’s vaunted broker-centric culture.
When Merrill announced its 2018 compensation plan earlier this month, it said its average broker was on track to open just two accounts this year—and less than one when attrition of existing accounts was tallied in. Under the 2018 plan, brokers must add three new households and grow customer assets 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 brokers about the difficulty of building their books to meet the new targets, but the memo from the internal committee countered the assertions.
“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, said the vast majority of the firm’s brokers are sympathetic to the 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.”
Low “organic” growth is an industrywide issue, and most at Merrill appreciate the firm’s efforts, he asserted. “It’s not like I’m drinking the Kool-Aid,” Pluta said. “It doesn’t take much just to stay flat with last year on the comp plan.”
AGN leaders in the memo vowed to share their sales-growth tips 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 28 AGN committee leaders were 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.”