Tag Archive for: Merrill Lynch

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

Morgan Stanley Draws Two Merrill Private Wealth Teams with $11.8-Mln Combined in Boston and NY

Morgan Stanley on Friday reeled in a 31-year Merrill Lynch lifer in Boston and a four-broker Merrill team in New York producing $11.8 million in annual revenue combined as it continues to keep up the pressure on its wirehouse rival.

The hires followed at least two other million-dollar-plus recruits in recent weeks from Merrill, one in Cleveland and the other in the outskirts of Atlanta that represented another $5.3 million in revenue.

In the largest of the moves, Marcella “Marcie” Behman, who ranked 33rd on Forbes’ 2021 list of America’s top women advisors, left Merrill’s private wealth management office on Friday in Boston to join Morgan Stanley in Middleton, Mass., a Morgan Stanley spokesperson confirmed. She moved with four client associates: Jaclyn Snell, Mary Chase, Owen Murray, and Teddy Smith.

Behman had generated $7 million trailing 12-month revenue from $1.3 billion in client assets, according to a source familiar with her practice. She has a $4 million account minimum for new business, according to Forbes.

Behman had led the Behman Group within the firm’s private wealth unit, formerly known as the private banking and investment group (PBIG), serving ultra-wealthy clients, according to her registration records and former firm biography. She was not immediately available for comment, according to a person answering the phone at her new office.

Her former partner at Merrill, Steven T. Smith, had left in 2018 for UBS Wealth Management USA.

In the other Friday move, the four-broker New York team known as MKM Group decamped from Merrill’s private wealth management unit for Morgan Stanley.

The team, which includes Robert M. Matluck, Lee B. Konopka, Rachel B. McCormack, and Jonathan D. Moskowitz generated $4.8 million in annual revenue from $575 million in client assets, according to a source familiar with their practice. Matluck and Konopka had worked out of White Plains, New York, while McCormack and Moskowitz worked out of New York City in the Bank of America Tower, according to their BrokerCheck reports.

The most senior member of the group, Matluck, a 35-year industry veteran, started at Advest, Inc. in 1983, and worked at now-defunct technology investment bank L.F. Rothschild, Unterberg, Towbin, where he served as a senior executive, according to his LinkedIn and BrokerCheck records. He worked at Unterberg and successor firms before moving to UBS in 2009 and then Merrill in 2013, according to his BrokerCheck report.

Konopka, with 29 years in the business, started at Smith Barney in 1992 and moved to UBS in 2008, and Merrill in 2013, according to his BrokerCheck report.

McCormack had spent all of her 15 years in the industry with Merrill, according to her BrokerCheck report. Moskowitz, with 12 years of experience, started out with Collins Stewart from 2006 until October 2008, next registered with now-defunct brokerage Merriman Curhan Ford & Co. in 2010, and did stints at three other firms before joining Merrill in 2014, according to the database.

A Merrill spokesperson did not respond to a request for comment on either of the Friday departures.

The departures come as Merrill has been looking to moderate rising attrition with a series of policy tweaks, defensive measures, and spurring enthusiasm about returning to offices. A senior Merrill executive last month said the rate of competitive departures ticked back down to 3.9% in the third quarter, in-line with historical averages and down from what a spokesperson previously said was 5% in the second quarter.

Merrill has stood by a veteran broker recruiting freeze implemented in 2017 while Morgan Stanley has been aggressively hiring in recent years and CEO James Gorman last month touted the firm’s achievement of the unusual industry feat of net positive recruiting when comparing the of new hires to those who have left.

The Friday exits followed at least two other previously unreported Merrill-to-Morgan Stanley moves in recent weeks. On November 5, a producing manager for Merrill in Cleveland, Ohio who had spent his entire two-decade career with the firm parted ways with his team to join Morgan Stanley in the nearby suburb of Westlake, according to registration records.

Steven M. Rini, who started with Merrill in 2000 and had been serving as resident director since 2012, individually managed $320 million in client assets generating $1.5 million in annual revenue at his former firm, according to a source familiar with his practice.

Three advisors listed on Rini’s former team’s website, Dan A. Bragg, Steven Wickstrom, and Matthew Meyer, remain registered with Merrill, according to their BrokerCheck reports. The team was formerly known as the DBSR Wealth Management Group but now is called CLE Wealth Management, according to the Merrill website.

Rini and Bragg, who have spent all of his 43 years in the business with Merrill, did not respond to requests for comment for this story.

In Gainesville, Georgia last month, a duo of Merrill brokers who had produced a combined $3.8 million in annual revenue from $480 million in client assets also left for Morgan Stanley, according to a source familiar with their practice and registration records.

Thomas R. Johnston, a 28-year industry veteran who had spent his entire career with Merrill, and J. Thomas “Tommy” Turner, a 23-year broker who had joined Merrill in 2002 from PPA Investments, Inc. on Oct. 1 moved to Morgan Stanley to form the Johnston Turner Group, according to their BrokerCheck reports and team website.

Johnston, who ranked 14th on Forbes’ 2021 list of best-in-state wealth advisors, produced $2.5 million from $360 million of the team’s client assets while Turner produced $1.3 million from the remaining $120 million in assets, according to the source.

The Merrill spokesperson did not comment on the departures in Cleveland or Gainesville, which were confirmed by the Morgan Stanley spokesperson.

Original article: AdvisorHub

2022 Comp: Merrill Sweetens the Pot for Brokers Taking On Defectors’ Accounts

Merrill Lynch Wealth Management is making it more lucrative for brokers to try and retain customer accounts when advisors in their office leave for the competition, a senior executive said in announcing the firm’s 2022 compensation plan on Tuesday.

Starting January 1, Merrill is ending a penalty that was put in place in 2018 and reduced payout on accounts transferred from a departing broker by 50% for the first year and will instead pay the assigned broker on the full amount of revenue those accounts had generated, the executive said.

Merrill also widened the time window brokers have to solidify relationships with transferred clients from one year to six months, the executive said. During that year, Merrill will refrain from having the lost account dock brokers’ net new asset flows, which would hamper their ability in some instances to hit targets for bonuses. Merrill expanded the time to one year based on broker feedback, the executive said.

“Our goal is to make sure you can have confidence in retaining clients knowing you won’t be impacted by any losses for a full year, and you’ll be compensated for any effort you are putting into retaining those clients,” Kirstin Hill, Merrill’s chief operating officer, said in unveiling the changes on separate a call with brokers on Thursday, according to a person who listened to the call.

Merrill is also keeping unchanged the breakpoints in its core cash grid that pays brokers 34% to 50% of revenue but will adjust how it calculates brokers’ payout level. Under the 2022 system, brokers will qualify for their pay hurdle each month based on rolling 12-month production rather than setting payout based on an end-of-year snapshot with a mid-year look back.

The new system is more friendly for customers and regulators because it does away with the potential conflict for brokers to try to generate additional fees and commissions to hit a higher hurdle by the end of the year.

“Perceived or real, it is a concern among regulators, and we are an outlier in terms of still having that,” Hill told brokers.

Rival wirehouse Morgan Stanley, for example, put in place a rolling grid system in 2018. (Similar to Merrill’s transferred account policy, Morgan Stanley also in 2016 said it would not pay brokers on accounts transferred from defectors unless they retained at least 50% of assets after three months.)

Merrill is leaving unchanged the so-called growth grid, which was also introduced in 2018 and adds or subtracts 100 basis points of payout depending on net new assets and household growth, according to the company. Under the current hurdles, which were reduced during the Covid-19 pandemic, brokers must add a net of three households and grow assets 2.5% year-over-year to maintain their current pay.

Merrill is on track this year to pay a net $130 million in additional compensation tied to the growth grid program, the company said. Around 80% of brokers are set to maintain their current pay or receive additional compensation this year.

Merrill’s 2022 plan also maintains its team grid policy granting all members the cash grid rate of its top producer as long as the team meets a “client engagement standard.” Roughly 90% of teams have met that benchmark, which requires that 30% of the team’s clients are purchasing services from parent Bank of America or Merrill in three of the four following categories: fiduciary investment advice, trust and insurance, lending, and core banking, the same executive said.

Merrill will provide the 10% who have not yet met the standard until 2023 to do so, as well as leave all of those that qualified in 2021 as eligible for next year, the executive said.

To some brokers’ chagrin, Merrill Lynch Wealth Management President Andy Sieg, who last month telegraphed few changes, acknowledged on the Tuesday call with brokers that the firm was keeping in place a controversial 3% haircut that the firm introduced in 2019 on their production credits.

“This is a common feature across the industry in advisor compensation plans,” Sieg told brokers, noting many competitors hide similar haircuts in how they credit brokers on advisory revenue. “It helps us further invest in you and the firm.”

Hill also noted that the plan has a cap at $40,000 of ineligible production credits per year and the highest cash payout amount that a top producer could lose is $25,000.

“Certainly, you can rest assured it will be reviewed again as it was this year,” Sieg said of the haircut.

In recent months, Merrill has sought to soothe broker qualms as dozens of high-end producers have jumped to the competition. The wirehouse in August launched an eight-week campaign, tagged Project Thunder, that highlighted policy changes it was making based on advisor feedback. The changes included: relaxing the rules for onboarding clients with marijuana-related businesses, plans to increase brand advertising, and the introduction of a  new mobile tool called the Mobile Advisor Experience or “MAX” that integrates several broker desktop features into one application.

Sieg told brokers on Tuesday he did not have an expectation that it would solve all of their concerns but hoped they would see it as a “downpayment” on the firm’s willingness to make changes.

Merrill has also made other changes to improve retention of clients of departing brokers, including piloting a program of “client experience specialists” who call on customers as soon as their broker leaves to introduce them to a new broker at Merrill and offer incentives, such as fee discounts, to those clients who stay behind.

The comp changes are also being unveiled on the eve of Merrill opening a new, higher-paying Client Transition Program for retiring advisors that were announced in 2019 but does not officially start until November. The program, which is open to those who are 55 years old and have at least five years of service at Merrill, has a first wave of enrollees who will start in the program next week, the person said.

Original article: AdvisorHub

Merrill’s Retention Bonus Won’t Stop the ‘Heard’ from Running

In conversations with several sources ‘in the know,’ we’ve learned that Merrill Lynch is asking very select, large ‘elder’ producers to sign what sound, look, and smell like retention bonuses but are being sold as retirement compensation.

This is not an original playbook since Morgan Stanley tried the same trick years ago but failed.

Here is the setup from one of our sources:

“Merrill Lynch is telling advisors/teams above $5M to take a payment of 100% of their current T12 and connecting it to their retirement deal. In other words, take about half of your retirement deal now (which is upwards of 250%) and sign this document that you are staying and keeping your business here at Merrill.” Is this a perk or ploy? Read the fine print, you cannot leave the firm and must retire at the firm but also worse.

Gershman Group

“You can imagine what the unspoken consequences of not signing that deal look like to management. If you don’t take the cash it signals that you are more inclined to leave the firm than stay. Now you’ve got a target on your back. If you dot and I or cross at wrong you’ll get fired. That’s the intention here. So this isn’t a retirement bonus, but rather a retention scheme.”

We spoke to another source that backed up these claims. All of this is being done in a very quiet, closed doorway with the firm’s oldest and largest producers. And Merrill has set a precedent over the past year that they won’t blink in firing big producers – not just for industry violations, but rather internal firm policy violations.

As, effectively, Merrill is just trying to look like they care about retaining the ‘Heard’ but only care to retain those they feel are most likely to leave who may receive a double-dip deal (a full 300% + a retirement deal of another 250%= 500%). They can put this kind of pressure on advisors and not worry about the cultural implications since it is no longer Merrill’s culture, it BOA’s. Keeping it ‘niche targeted’ to its top 10% or so of producers makes it seem/feel almost like a perk.

Take a step back and consider the cost. What sounds too good to be true probably is – a financial firm doesn’t give money away for free. Think about it.

Merrill Project Thunder Reactions: “It’s more like Tropic Thunder around here, nobody is listening to that guy…”

Andy Seig has limited to zero credibility left with top tier Merrill advisors left at the firm. When he speaks, nobody listens. When he green lights a new initiative like ‘Project Thunder’ nobody listens. And when he speaks in corporate vague double talk… he’s quickly ignored.

His lack of influence was on display in the last ten days after the announcement of Project Thunder (who came up with that name?). Advisors we spoke to in every corner of the country simply rolled their eyes, while 90% ignored the details of the memo altogether.

Here are several quotes from Merrill advisors we spoke to in the past week:

“My partner and I thought it was laughable. There are no details, no increases to our bottom line in any way. And who came up with that name? It’s a clown show in the C-suite here. Stuff like this only proves it.”

“…it’s more like Tropic Thunder from that guy and his internal bank based PR folks. He’s a puppet of BofA.”

“Wake me up when they announce next year’s grid. If I had to guess, this is window dressing for more shenanigans to our comp, I’d even bet on it.”

“Nobody listens anymore. There is no trust. Zero culture. Using the term ‘Thunder’ as a marketing ploy is even more lame.”

It seems that cynical is the word of the day to describe the vibe at Merrill Lynch. And the proof remains in the pudding, or in this case, data. Large teams leave every week. Every single week.

And we hear, that teams that are in the fence are waiting for another shoe to drop with comp grid changes to give them the final push out the door. Based on recent history, you should probably bet on it.

Suffocating Compliance – Big Producers At Merrill Complain They Are Being Treated Like Bank Brokers

It isn’t enough that Merrill Lynch is now just Merrill. It isn’t enough that more than half of your colleagues that you respect have left the firm. It isn’t enough that Andy Sieg thinks that advisor attrition is ‘seasonal’. It isn’t enough that no matter your loyalty to the thundering herd and the Merrill brand – BofA just doesn’t give a sh%t about you.

That reality was hammered home again early this week with conversations we had with two large and well known teams. Beyond the cultural rot inherent at BofA/Merrill, the compliance burden has gotten nearly unbearable.

From an advisor on the east coast, “It is hard to describe the insults that come disguised as compliance on a weekly basis. I’ve got a perfect record and have put real effort into being a Merrill guy over the years. But almost every week I’m getting pinged by compliance over dotted i’s and crossed t’s.”

“An example last week… I sent an email to a client with some good news that their mortgage rates had ticked lower by a quarter point. Less than 4 hours later I got a compliance letter that I have to respond to regarding ‘quoting rates’ in a correspondence. It’s like I’m being treated like a trainee or bank broker. And responding to this shit takes time away from growing the business. It’s constant and makes it harder to do business here.”

We did a little digging and found that this has been common practice with BofA over the past year or so. Every email, every text, every syllable is scrutinized. And if you trip up, you’ve given them cause for termination.

We put together a short podcast Q&A with Brian Neville that speaks to the issues that have caused big Merrill teams to exit the firm week after week. The revelations he shared associated with surveillance were mind blowing. When tied to the above quotes it paints a picture of a legal ‘overstate’ at BofA that is cause for serious concern.

Another reminder that more than 200 teams with $1B or more in assets have left Merrill in the past four years. Read that again. It’s becoming increasingly easy to understand why.

SURVEILLANCE CONFIRMED: BofA Fires Multiple Merrill Advisors For Sexting (and game play)

We told you last week that firms were conducting different types of surveillance on their advisors. We also told you that BofA/Merrill was the worst offender. But it’s worse than that.

Beyond surveying your bank accounts (which can be mildly defended just in case you take side payments from ‘Grandma Jones’), BofA is now firing advisors for elements of sexting.

So personal behavior, which certainly isn’t any sort of crime and is done outside the confines of the bank itself, is now grounds for dismissal. Amazing.

Follow this for a minute. You receive a ‘free’ corporate phone, under the guise of monitoring client communications, they also spy on your personal conversations, then decide which of those seem to breach some sort of code of conduct, they then catalog it, and then you’re fired.

Nothing like a new and novel way to built culture and trust in your employer. And FYI – everyone reading this realizes that those phones can track your every location and move as well right?

So the story about being forced to own a ‘burner phone’ while working at Merrill now makes all the sense in the world. Amazing.

The most egregious of this current batch of firing was a broker, who asked to remain anonymous, shared messages via LinkedIn. Those LinkedIn DM’s were deemed inappropriate, even though they weren’t affiliated with anyone based in the wealth management industry whatsoever. After 22 years with Merrill, this advisor was fired.

Read that paragraph again. Your phone, LinkedIn, and private messages are being surveilled by BofA.

Tell me again why you are still there?

Merrill Culture In Six Words: “Call me on my burner phone…”

No reasonable participant in the wealth management landscape would argue against the erosion of the once and former strongest culture in the space: Merrill Lynch.

Under the leadership of Bank of America and Andy Sieg Merrill Lynch culture has evaporated, utterly and completely. In a prescient moment with an advisor last week, we found the essence of that epic erosion:

“Call me on my burner phone, everything else is monitored.”

Six words that should scare anyone that still works at BofA/Merrill. Call me on my burner phone. It’s like this guy is acutely aware that if he makes even the slightest misstep the ‘cartel’ that is BofA will show up unannounced and end their career.

The concern and need for a burner phone is certainly well founded. More than $200B in (NET) client assets have exited the firm in the past four years. A reminder that no other firm in the industry comes close to those numbers.

To break that down further, that’s 100 of the biggest teams in the industry. Based on publicly available data, the top 1% of the industry (advisors and teams) manage more than $2B in client assets. So BofA/Merrill has lost ONE HUNDRED of those teams in the past four years. That is a remarkable stat.

There are endless analogies that would drive home the need for a burner phone as a Merrill advisor. No matter which you use, any culture that forces you to use one can be summed up in one word: toxic.

SURVEILLANCE: Sources Confirm That Merrill Lynch And Other Firms Monitor Advisor Bank Accounts For Suspicious Activity

In a wide-ranging interview with a legal expert in the securities industry, a revelation was made that should send shivers down the spine of every financial advisor.

Brian Neville, a well-known investment and securities attorney who routinely handles dozens of large team transitions every year, mentioned that Merrill Lynch (and others) use artificial intelligence to monitor transactions in advisor bank accounts for potential activity associated with leaving their current firm. Whoa.

After the conversation (which can be found here) we took to confirming the bombshell by speaking to sources at multiple banks. And sure enough, if you have personal accounts at the firm you work for they are watching. And the bigger the firm/bank, the more closely they are watching.

One source had this to say: “The type of activity has been going on for more than five years. The AI is used to scan for all kinds of activity across the entire bank… but adding advisor-owned accounts was an adjustment once the broker protocol exit became a thing. That change removed several legal roadblocks to keeping closer tabs on advisors.”

Another source wasn’t surprised: “This isn’t news to me, but that doesn’t mean it’s right. The environment we work in has become a 50/50 proposition – half of the time serving clients, half the time covering our own ass.”

The response to this revelation has been exceptionally strong. Advisors are looking for options that respect their work and allows them some level of mutual trust with the firm they work for… and this ain’t it.

Specific to Brian Neville and his comments, he added this as a way to combat the surveillance state of a place like Merrill Lynch, “whatever you do, don’t hold cash-heavy positions at your own firm, more so it even makes sense to hold your own investment portfolio away as well. Remove the conflict of interest altogether.”

Good advice, Brian, good advice.

Another Big Team Bails; Merrill Exodus Continues As UBS Adds Another $2B To Their Private Wealth Platform

There is no more anecdotal evidence needed here. The Merrill exodus that was predicted by this author now six years ago has become, as one Merrill advisor aptly put it a few days ago “who’s left today”.

That is where Merrill finds itself. Its advisors check industry publications to see who has left the firm every day.

Not each week, or each month… but every day.

This time the transfer occurred in NYC to the tune of nearly $2B and annual revenue at more than $11M.

Led by Stephen Kincade and Alexander Fridell the team made the transition based “almost purely on culture”, said a source close to the team. Other members included on the team are Chris Kincade (Stephen’s son) and client associates Zach Kingsley, Jessica McEntee, and Elle Schiowitz.

We mentioned in this publication last week that Merrill had lost $200B in client assets in the past four years. Now make that $202B. As big as this team in NYC is, Merrill has lost 100 of them in the past 48 months. Read that again.
It’s stunning… or according to Andy Sieg “it’s seasonal.”

We expect the procession and mass migration out of Merrill to continue as the level of noise in recruiting circles is at all-time highs. The fall has historically been the most active transition period for financial advisors. It will be exceptionally so this year.

Just one more time for effect: “The uptick in advisor attrition associated with competitive recruiting is seasonal.” – Andy Sieg