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Whenever something of scale works at the wirehouses you can bet the others are going to do their best to copy it without making it look like they are copying it. Exhibit A is Merrill’s current comp plan adjustment based on new household additions, and whether or not an advisor makes the grade.
You can bet your ass that the comp changes that found their way to UBS advisors a couple months ago is parroting this in some way – and while you are at it go read the fine print on WF’s 2020 comp grid. New households are all the rage as the bull market extends. And Merrill Lynch was the first to put the screws to its advisors.
Via Barron’s:
“The wirehouse added 47,000 new households in 2019, Sieg said. That’s based on annualized first-quarter results and would mark a big increase over the 7,000 households Merrill added in 2017. Net new households added per advisor are now more than four, while the average Merrill Lynch household has about $1.4 million, he added.”
“The wirehouse’s current compensation scheme includes a carrot-and-stick approach to getting the thundering herd to bring in new clients. An advisor’s pay suffers if he or she doesn’t bring in more than four new households and gets boosted if they recruit six or more.”Those numbers have moved the needle enough to be highlighted on a BofA quarterly call. That in and of itself is meaningful.

You can expect Morgan Stanley and UBS to devise like-minded scripts over the first half of 2020 and announce them internally (yep, done and done). Finding a meaningful ‘carrot and stick’ isn’t easy in today’s wealth management landscape. It seems Merrill did just that.

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