Virus Relief: Merrill Removes Mid-Year Test for Team Payouts
Merrill Lynch is temporarily waiving its requirement that brokers have at least 30% of their client household accounts in banking, trust and advisory programs by midyear to qualify for enhanced “team grid” payouts, acknowledging their more pressing client concerns during the coronavirus market crisis.
The brokerage giant will extend the pay measurement relief through yearend “during these unprecedented times” to allow team advisors “to remain diligent and focused on client concerns,” the company told its brokers on Thursday and Friday. The client engagement criteria will be reinstated in 2021, with the team grid payout kicking in once the 30% hurdle is hit. (The higher payout will continue to be retroactive to the beginning of the measured year once the team metric has been reached.)
Merrill introduced the client-engagement incentive two years ago for the dual purpose of encouraging team membership, which permits sales specialization and creates obstacles to leaving for other firms, and of gluing customers to advisory accounts that generally generate more predictable fees than transactional accounts, and to bank services.
More than 80% of Merrill’s 14,000-plus brokers work on teams, company officials said.
Merrill has not to date implemented other compensation modifications to help brokers cope with the crisis, said people familiar with its policy announcements. It will continue with its midyear measurement of new account and asset growth, clawing back 1% from the previously calculated advisor payout as of June 30 if they are not on target to add at least four net new households for the year (two by midyear) and another 100 basis points if they fail to meet a prescribed minimum of new assets. [Editor’s Note: Merrill in June reduced the midyear household growth requirement to one new household.]
The firm is, however, examining whether to modify production metrics for advisors in its three-year training program, said a person familiar with its crisis deliberations, and is hosting regular business continuity updates and a peer-to-peer call series for advisors to share best practices.
In a video posted on social media on Thursday, Merrill Lynch Wealth Management President Andy Sieg expressed his confidence in the U.S. economy and the “resilience” of the financial system. He thanked employees for providing “the highest standard of care for our clients in good times and bad” and encouraged clients to “reach out to us if you need help.”
Thanking them for “always trusting us to put your interest first,” Sieg concluded: “We’re all in this together. Just one more reason that all of us at Merrill are still bullish on America.”