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Merrill Lynch just rolled out a new ‘comp plan’ for retiring advisors who want to be compensated for handing their books off to younger advisors. The changes to the plan will take a bit to kick in, but seem to offer meaningful bonus boosts across the board. So much so that some are seeing this new plan as a pseudo ‘low-key’ extra round of retention bonuses.
Per reports:
“Merrill sweetened the program and made other tweaks—including guaranteeing the starting payout as a floor for age-eligible brokers in top-recognition clubs and those with at least 20 years’ experience, even if production revenue from their transitioned clients falls—to compete with improvements UBS and Morgan Stanley made in their programs in 2017 and 2018, respectively, according to a senior executive and some advisors who said they had lobbied for revisions.”

“Merrill executives told brokers that the new program is the only one in the industry with a fixed payout guarantee. (It had phased out the guarantee last August.)”

“The changes will not be effective until November 2021, which the executive said gives advisors contemplating retirement time to discuss their plans with teammates, clients and their families. The program is open to brokers who have at least five years of experience at Merrill and are at least 55, provided that the two numbers add up to 65. (A 55-year-old with ten years at the firm makes the cut, but a 54-year-old with 11 years does not.)”

Interesting move by Merrill here. Defining the opportunity to stay at the company, with a string of bonuses attached, as larger and larger teams continue to flee the firm. And you can bet that their bean counters crunched the numbers on the size of teams with elder statesmen attached to them and the response they could reasonably expect from them.

As a ‘low key’ retention package for certain types of advisors we’d guess that this could/should work. As per usual, time will tell.

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