Growth Grid: 60% of Merrill Brokers Scored Higher Payouts in 2021

Around 60% of Merrill Lynch brokers earned more last year under the firm’s “growth grid” that ties their compensation to attracting new customers and assets, a company spokesman confirmed.

Another 22% of Merrill brokers had their pay cut for not meeting targets while 18% maintained their payout rate. The grid, which was introduced in 2018, adds or subtracts one or two percentage points from broker payout rates for net household and asset growth.

Merrill executives touted the numbers as a strong recovery from the pandemic-afflicted 2020 when only 48% of brokers qualified for a higher pay level and 30% saw a reduction.

“Merrill advisors enter this year with tremendous momentum, having achieved best-ever growth grid results in 2021, and many having had their best year ever,” Kirstin Hill, Merrill’s chief operating officer, said in an emailed statement.

Merrill is set to pay a net total of $134 million in additional compensation for 2021 in connection with the program, an increase from $72 million in 2020, the spokesman said. That equated to around $15,000 on average per eligible experienced broker.

Under the growth grid, which Merrill kept in place for 2022, brokers must add at least three net new households per year to maintain their current pay or face a 100 basis point cut. They can earn an additional 100 basis points for adding six or more.

Merrill’s growth grid also includes awards and penalties for annual net new assets, requiring at least 2.5% year-over-year growth to avoid a percentage-point payout cut and 5% growth for a 1% grid-rate bump.

The plan also includes a “top performer” bonus that adds a total of 3% to the payout rate if brokers add at least 30 net new households or have $150 million in net asset flows. Around 210 brokers qualified for the top award in 2021, a spokesperson said. That was above the 130 who qualified in 2020 and 100 in 2019.

The growth grid, which took effect the year after Merrill President Andy Sieg froze veteran broker recruiting, helped propel net new households to 22,000 in 2020, a figure that the spokesman said Merrill was likely to hit again for 2021.

That would still be below the 35,000 that brokers attracted in 2019 but well above 2017 levels prior to the grid when the average broker added less than one new account per year on a net basis.

Still, the program has been controversial among brokers, including some who have qualified for bonuses but still said they felt distracted from serving their core customer base by the mandate to prospect.

Merrill also offers incentives to advisors for cross-selling its Bank of America parent’s products or getting clients to use more digital services. In 2019, it stopped paying brokers on the first 3% of monthly revenue they produce–a policy Sieg told brokers during a town hall in October brought the firm in line with competitors’ pay policies on advisory revenue.

Merrill’s net new household growth meanwhile was on track with last year. The spokesman said that a final year-end tally was not available, but that Merrill brokers had added over 16,500 through the end of the first three quarters of 2021, consistent with the first three quarters of 2020 when it added a total of 22,000 for the full year.

Morgan Stanley Wealth Management and Wells Fargo Advisors lean on deferred compensation awards to drive brokers to gather assets. Morgan Stanley told brokers in December it would in late 2022 begin crediting them for new customer assets brought in through the E*Trade self-directed platform, while Wells sweetened its new asset bonus with additional awards for top growers, according to a plan unveiled last month.

Original article: AdvisorHub

Did Goldman Knock This Down to Pick It Back Up

Two for two on Apple day trades as well, and I think Goldman Sachs may be up to something fishy right now…

Subject to quite a bit of skepticism, this exact scenario actually happens quite a bit…

Nio Incorporated (NYSE: NIO) is up about 100% over the past 30 days. Unless the company internally implodes or markets crash, the sky seems to be the limit for this electric car company.

But what if some financial professionals missed out on any bullish profits on NIO’s massive spike over the past 30 days or simply want to make the same money twice? What are they supposed to do in order to be offered another chance at making some money on NIO themselves?

Now, I’ve said this before and I’ll say it again… Financial professionals can move markets with one click of a mouse or by issuing one press release.

And the fat cats at Goldman Sachs did exactly that about 22 hours ago by issuing a downgrade on NIO. The stock instantly dropped 4%.

But here’s what makes me really interested…

Just yesterday, option players came in and bought $104k worth of call options on NIO, anticipating NIO’s price-per-share rallies to $7 or higher by tomorrow’s closing bell.

Did Goldman knock NIO’s price down only to pick it right back up at a discount? It actually happens pretty often, and we may be seeing that exact scenario play out on NIO right now.

NIO Daily Chart

While moves of this nature do come with some skepticism from retail traders who cannot manipulate a stock’s price-per-share and move money in or out of it at will, I don’t really care too much…

I’m just looking to make a move or two on NIO in the hours or days ahead and make some money on it myself.

Shown in green in the chart above is NIO’s 20-day simple moving average line (20 sma), a critical support level. If NIO holds, I may buy call options alongside yesterday’s $104k option player for a fast-moving trade opportunity.

Below NIO’s 20-day simple moving average line and I’ll follow the money flow prior to making any decisions. Oftentimes stocks like NIO are knocked down in price only to be picked back up at a discount, and I don’t want to be betting against a stock while a six-figure buyer comes in and makes a potential bullish bet.

I’ll be in touch mid-day with updates and a watchlist.

Let me know how YOU do today!


Yours for TrackStar trading,

Davis Martin
America’s #1 Options Trader


Merrill Lynch Advisors Shook: “…new workstations using AI to spy on us.”

Merrill Lynch formally announced a brand new workstation for advisors that have already been rolled out to 5,500 of the thundering herd so far this year. The other 10,000 or so ‘advisors’ (let’s not have the conversation today about Merrill’s actual broker headcount please) underneath the BofA umbrella will have the new system installed over the coming months. While the new workstation has all sorts of bells and whistles and cost BofA nearly $100M in development cash, advisors are worried about one thing and one thing only – the AI inherent in the system and its ability to hear, see, interpret, and control every keystroke, word spoken, and client interaction.

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Rockefeller Continues Recruiting Rush; Lands Another Whale In Texas ($15M Deal!)

Rockefeller remains on a recruiting tear as it launches new locations and lands massive teams from what should be considered rivals now, like UBS, Merrill, Morgan Stanley, and Wells Fargo. The latest trade has Rockefeller landing another big team in Texas for the second straight weekend. As you may recall we predicted this streak and are aware that it will continue: Rockefeller Set To Win Big Over The Next Three Weeks

The details of their latest hall read like this: Rockefeller Capital Management on Friday landed a three-broker team headed by Shay Scruggs,  that generated $5  million in revenue. The group, which includes junior partners Kevin Wright and Trenton Hollas, who have four and five years of experience respectively, oversaw $500 million in AUM.

The group will be part of a cadre of advisors in Houston that are set to open up another flagship office for Rockefeller in Texas. Rockefeller continues to expect to add more and bigger teams in both Houston and Dallas, respectively.

There continues to be a strong drumbeat for three issues that make Rockefeller intriguing. The name itself, Greg Fleming’s leadership, and the tech platform they seem to have nearly perfected. Every single contact we have with anyone engaged with Rockefeller mentions those three points. Everyone.

Recruiting in wealth management is as hot as it has ever been right now. Deals are sky-high if you are a ‘Tier 1’ advisor or team. Competition is absolutely fierce across several levels of the wealth management spectrum.

As an example, what could a $4M team at Merrill Lynch expect to be able to demand from the recruiting market place right now? Assuming they laid their fleece out to Wells Fargo, Morgan Stanley, UBS, Rockefeller, and First Republic? At a minimum the package would ring the bell at $12M; and maximum with deferred matched and back ends met (wait for it…) $20M. In other words, a team situated like that should expect no less than a bidding war and not a penny less than $15M. Yes, the recruiting landscape is on fire.

And Rockefeller is as hot as any name.


Morgan Stanley Push: Recruiters Make Claims “…they are being very aggressive.”

Morgan Stanley re-entered the recruiting sweepstakes, post protocol exit, late last year with a bang. After leading the wires (along side Wells Fargo) in losing headcount to the resurgent regional space over the past two years Morgan Stanley has been very aggressive in recruiting large teams away from their rival wires. They’ve had specific success in recruiting away large teams from Wells Fargo and UBS.

There is a good reason why those teams are listening to Morgan Stanley’s pitch. Besides the requisite largess of the firm as a global investment bank that competes directly with the likes of Goldman Sachs and JP Morgan – the firm *dolla dolla bills y’all* recruiting deal is massive. If you play your cards right you cash in to the tune of 250% in the first 4-6 months at your new desk. All in, the firm has been known to pay the biggest and most visible teams more than 350% when you count deferred comp recovery payments. Huge.

Doing a little math – if you are a $3M dollar team in, say, Washington DC the numbers quickly skyrocket. You walk in the door and receive a check for $6M dollars (200% upfront). Transfer 50% of your assets in the first 180 days and you will be handed another $1.5M dollars. By the time you’ve hung a few pictures in your office and have finally figured out how to use the firms CRM software you are $7.5M dollars to the good.

That puts butts in the seats. The total of 250% within your first 180 days at the firm is an eye opener and sets the wirehouse apart from rivals. The low barrier of entry on that extra 50% is a dealmaker as well. Big teams find themselves intrigued by it and finding ways to justify tethering themselves to the firm for the rest of their careers.

Speaking to a long tenured recruiter about Morgan Stanley’s current push:

“They are being aggressive in specific markets with teams that are north of the $2m dollar mark. The aggression largely has to do with the funds added on the deferred comp end of things, but also moving hurdles around to make the deal more ‘gettable’ in the short term. Teams are responding to the flexibility that comes with a 350% deal, most of which you essentially get up front. My guess is that they will remain aggressive coming out of the pandemic and try to scoop up some headliners. I know that is what the current thinking is with Saperstein.”

The pandemic issues have brought a uniqueness to recruiting with a particular set of circumstances that can be exploited. In some specific locations clients are still locked in quarantine and much easier to reach. Reaching them, though, has its challenges as advisors can’t get face to face to process ACAT documentation. Still, the narrative has been that transfers have been swifter based on clients availability and lack of distractions.

Clearly, Morgan Stanley is focused on capitalizing in whatever way they can.

UBS Set To Reduce COVID-19 Restrictions For Employees; WFH Policy To Be Optional

UBS is set to tell it’s global staff that the era of enforced ‘work from home’ is about to come to an end. Not that employees (traders, advisors, admin and operations staff) will be forced to return to office buildings and trading floors, but rather be encouraged to return as they deem reasonable and comfortable.

A limited number of employees in jobs that have risk-management aspects will be allowed, but not required, to return to the bank’s skyscrapers in the U.S. city, a person familiar with the matter said. The Swiss lender joins rival Morgan Stanley in allowing some employees to return to work after the pandemic’s spread eased.

The bank’s trading floors in New York are being reconfigured to comply with physical distancing guidelines, the person said. UBS is also considering staggering and assigning departure and arrival times for its staff to avoid lines forming at entry points and elevators, as well as when employees should wear masks and have their temperature checked, according to the person.

“The health and safety of our employees and clients remains of the utmost importance. As we monitor the relaxation of lockdowns across the U.S., we are beginning to prepare our workplaces and our teams for a gradual and safe return to the office,” UBS spokeswoman Erica Chase said. “Our approach will be coordinated across our entire regional footprint, taking into account the relevant local conditions, as well as the guidance of government and public health authorities.”

In Switzerland, UBS workers beyond essential staff will return to offices starting in the middle of the month, with the speed of their return depending on capacity to maintain social distancing.

Morgan Stanley And UBS: Non-Protocol Firms Aggressively Stalk Private Banking Teams

A clear narrative is shaping up amongst wirehouse rivals Morgan Stanley and UBS. As both firms exited the broker protocol within weeks of each other their recruiting strategies have begun to mirror each other as well. Both firms have decided that aggressively pursuing private banking teams at the likes of Goldman Sachs, Bernstein, Bessemer Trust, and even J.P. Morgan is a pathway to stability and revenue growth in their all-important wealth divisions.

Over the first six months of 2020, even with the coronavirus pandemic and civil unrest, UBS continues to announce large team acquisitions that hail from the private banking sector. Managers across the US, at the swiss-based firm, have confirmed to us that deal negotiations no longer include private banking discounts – rather, UBS is paying full freight, and then some, for private banking teams of scale. This is a dramatic shift from years of recruiting teams that may include employment contracts laced with non-compete, non-solicit, and even garden leave language. UBS has decided that it is worth the legal risk.

Morgan Stanley isn’t far behind and is quickly learning from its rival that leaning into the private banking space makes a lot of dollars and sense. Morgan Stanley has begun to back away from any discounting of private banking team deal dollars and treating advisors and their teams no differently than an elite level Merrill Lynch recruit. Again, a major shift in both philosophy and execution.

It now looks like the unrest in markets and potential larger-scale disruption to books of business is on hold, but the impetus to switch firms looks to be at or near all-time highs. Why? The nearly 40% haircut that occurred in a furiously fast downturn spooked a lot of advisors and woke them up to the long-term value of monetizing their hard work right now. Adjusting policies around recruiting deals and the who/what/where/why matrix seems to have shifted at both UBS and Morgan Stanley.

So far, UBS is seeing real dividends in landed recruits. We expect Morgan Stanley to follow suit as the year moves forward.

RUMOR: UBS Set To Land Massive Goldman Sachs Team; Could Be $15M+ Rev, $5B+ AUM

There are rumors swirling within the wealth management world that UBS is about to land a massive Goldman Sachs private banking team. Sources at UBS have passively confirmed the potential move with a wink and a smile via text and signaled that we should keep a sharp eye out for a pending announcement.

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Goldman Sachs Botches Response; Emails Passive Denial Of Details Of Sexual Harassment Claims

Goldman Sachs attempted to reach out to us yesterday in hopes of reducing the interest that our story garnered regarding two individuals that had dealt with differing degrees of sexual harassment at the global investment bank. The denial was both weak and soft and didn’t remotely speak to the veracity of the allegations themselves, but rather to the release of the information and whether or not it was appropriate to leak the nature of ‘sealed agreements’. Saying that again, their response was weak.

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Merrill Lynch Smoke And Mirrors; Effort To Boost Sliding Advisor Headcount Falls On Support Staff ‘Pathways’

Merrill Lynch remains a constant loser in the world of wealth management recruiting. They’ve continued to retreat as rivals like Morgan Stanley, UBS, Wells Fargo, and the likes of Rockefeller and First Republic clean up. When was the last time you saw a meaningful Merrill Lynch recruiting headline announcing the arrival of a new team? Exactly.

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