Merrill raises broker bonuses for new accounts and assets

Thu Dec 11, 2014 1:18pm EST
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By Jed Horowitz

NEW YORK (Reuters) - Merrill Lynch told its 14,000 brokers on Wednesday they will get higher bonus payments in 2015 for attracting new clients and assets but eliminated pay for servicing clients with less than $250,000.

The brokerage subsidiary of Bank of America Corp will pay brokers .10 percent of new assets clients use to buy loans, banking and trust products, or put into fee-based advisory accounts. The cash bonus - half paid at yearend and half over eight years - doubles the .05 percent paid this year for such "strategic" money.

Brokers attracting over $10 million of such assets get .20 percent and .23 percent for those reaching $50 million. However, bonuses in 2015 are being halved for new money put into low-profit money-market or bank accounts.

Brokerage executives and headhunters scrutinize annual changes in compensation at top firms to assess how they may attract or repel new brokers and retain veterans. Merrill's emphasis on bank products could be risky, one said, because the firm has lost brokers and been criticized for bending its traditionally broker-centric culture to the parent bank's norms.

"The number one reason people are leaving is the persistent pressure to 'BankofAmericanize' Merrill brokers," said Ron Edde, president of Millennium Career Advisors.

Merrill's strategy "to retain, strengthen and acquire clients and advisers is working and remains unchanged," said spokeswoman Susan McCabe.

The clients being retained are changing, however.

Three years ago Merrill eliminated pay for new households with less than $250,000 but "grandfathered" existing small accounts. It will now pay nothing on the grandfathered accounts, which comprised about 1 percent of client assets, or $20 billion, Merrill brokerage head John Thiel told Reuters last summer.   Continued...

A Merrill Lynch building is shown in downtown San Diego, California March 18, 2014.
 REUTERS/Mike Blake