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In a message to advisors, Andy Sieg took to the quarantined airwaves and sought to calm advisor concerns over team grids, payouts, and bank based bogeys that the firm put in place more than three years ago. In the midst of the bull market, Bank of America foisted all manner of ‘team-based’ incentive and penalty programs that sought to keep advisors at Merrill as well as increase fee based revenue, largely coming from bank based products.

Mr. Sieg sought to calm concerns but if largely backfired. Instead of easing concerns over payouts and policies that directly affect compensation, those fans were flamed and advisors have taken to discussing how a ‘band-aid on a bullet wound’ was just another failure of leadership.

So what did Mr. Sieg actually announce – and what did he not announce that could have been meaningful to advisors?

What was announced is a delay in evaluating team grids based on advisors having at least 30% of their client household accounts in targeted banking, trust and advisory programs by midyear to qualify for enhanced “team grid” payouts – pushing it instead to the end of the year. A six month reprieve largely leaving teams with their current payouts and avoiding any penalties of any kind. In other words, if an advisor hadn’t hit the bogey yet we aren’t going to hammer your payout in the midst of the corona virus pandemic. Thanks.

But what wasn’t announced is what has Merrill advisors talking and pissed off? There are other comp grid policies and punishments that weren’t given the time of day, nor has there been any discussion of pushing those back whatsoever. What about accounts that fall under the ‘zero payout’ threshold based on assets held at the firm. The severe downdraft in the markets has presumably had a meaningful impact on certain accounts and may cause advisors to receive zero income from those accounts based on their movement into this category. Mr. Sieg had nothing to say about this policy.

An even bigger issue is the penalty that Merrill advisors will be hit with should they not achieve household asset and account bogeys set by the firm at the beginning of each year. They are tasked with growing household numbers as well as overall assets to achieve maximum velocity on the firms comp grid. As it stands now advisors will still be tasked with hitting those ‘pre-pandemic’ quotas and hit with severe payout penalties if they fail to do so.

Clearly asset values have been hit, and hit hard – the discontinuing of policies that will destroy advisor payout connected to both assets values as well as asset growth should be suspended for the remainder of the year. Period.

Our guess is that Mr. Sieg and his downstream executives will wait as long as they possibly can to make any above changes that they purposefully chose not to this past week. The firm/bank is addicted to new assets and doing all they can to tie those assets to bank products as quickly as possible. Shutting down the penalties (they like to sell them as incentives) for not bringing in new assets and cozying them up to the bank will remain until it is basically untenable. Sad but true.


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