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As if this year wasn’t hard enough on advisors at BOA/Merrill with one of the worst years in the markets in a generation. Between the bond market and the equity markets, clients’ assets are down across the board by at least 10% and upwards of 25%. Naturally, production numbers are steady going down month after month equally too. And so too is it harder to maintain client relationships let alone bring on new ones to maintain payouts.

What a perfect time to raise production, raise growth such as new client relationship hurdles for advisors while also trimming pay on brokerage transactions! Andy is raising the bar at precisely the wrong time and essentially is saying, take it or leave Merrill (it).

Roger Gershman, who runs a boutique consulting firm and who specializes in Merrill Lynch teams says “advisors are outraged and this is the straw that really breaks the camel’s back.” Gershman laid out the net key takeaways.

  • Produce 5-7% or more to maintain the same grid payouts as last year
  • Advisors must bring in 4 (net new) clients from 3 to avoid a 100 basis-point cut to payouts
  • Advisors must target 6 (net new) households to add a 100 basis point to achieve a payout bonus
  • Cutting Brokerage Commissions from 5% to 25% for trading, bonds, stocks depending on the portion of client assets in brokerage accounts
  • Maintaining a 100 Basis Point reduction for advisors who do not grow by at least 2.5% (net new) assets

In rolling out the plan, Andy Sieg tried to sell the modifications to the salesforce as a “balanced” plan that will be overall net neutral considering adding back the 3% payout reduction which was stolen two years ago. Says an anonymous advisor the only “balance” in this plan will be for the BOA balance sheet and its shareholders.

Sieg also told advisors the Regulation Best Interest Rule has “introduced much higher scrutiny” of brokerage transactions and that commission business is a disproportionately higher source of litigation than advisory. Another ML advisor tells us, “So advisors get hit with upwards of a 25% hit only to save the firm litigation costs?”

Gershman says, “Seig is essentially telling ML advisors to take a long walk down a short plank

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