Merrill Lynch pay plan focuses on putting client money to use

Mon Dec 10, 2012 3:03pm EST
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By Ashley Lau

(Reuters) - Bank of America Corp (BAC.N: Quote) is ramping up its incentives to encourage advisers to convince their clients to take advantage of more of the bank's offerings. The firm is also sweetening incentives for advisers to keep the client money they manage at the firm once they retire.

In its 2013 compensation plan, announced to advisers Monday afternoon, the company outlined plans to remove the cap on awards offered to advisers for bringing in more fee-based assets, as well as other banking, lending and annuitized products.

Merrill also increased the expected payout for advisers who keep their client accounts at the firm after they retire. Often, brokers will become independent advisers or sell their books of business to an independent advisory firm, pulling hundreds of millions of dollars in assets away from the brokerage firm. Veteran advisers generally manage a bigger pool of assets at a company and keeping them provides a needed source of revenue.

The changes come as wealth management businesses are increasingly seen as a key revenue driver for many major Wall Street companies.

"What they're doing is trying to get advisers to diversify their client assets beyond the traditional Merrill Lynch product offering," said Mark Albers, a former Merrill complex manager who now runs his own firm, Albers & Associates Consulting. "It's obviously their attempt to ... leverage the rest of the bank."

Bank of America acquired Merrill Lynch in early 2009 in the midst of the financial crisis. Since then, though, advisers have sometimes bristled at feeling pressured to pitch bank products and answer to clients about their concerns over their parent company.

The Strategic Growth Award, now uncapped, will shift the focus for earning the bonus more towards growth in areas such as fee-based assets and lending, rather than simply increasing net new money, previously a pillar of the award.

"It forces them to put (the assets) to work in order to be compensated," Albers said. "The firm makes money by having assets that are invested in fee products."   Continued...

A man walks out from the Merrill Lynch building in New York, May 7, 2012. REUTERS/Keith Bedford