Merrill to Lengthen Salary Guarantee for Early-career, Small-Town Brokers
Merrill Lynch as of September 1 will pay early-career brokers joining its Accelerated Growth and Community Markets programs a five-year salary guarantee, up from three years currently, a spokesman confirmed.
The CM and AG programs, launched in 2018 after Merrill retreated from hiring veteran advisors, will continue to supplement the fixed salary for early-career brokers with a traditional grid-based production payout that starts at 34%.
Brokers must meet asset-transfer goals to remain in the program.
Merrill officials would not comment on whether they are lengthening the salary guarantee because of concerns about an accelerated pace of departures of veteran brokers.
Net hires into Merrill are difficult to track because Bank of America a year ago stopped breaking out advisor headcount at its wealth management division. Attrition of experienced advisors is at a “historically low’’ annualized level of 2.4%, a Merrill executive said earlier this month. Merrill continues to operate its traditional 43-month training program for neophyte brokers, and next month is introducing a new position for broker sales associates that may prompt some to join the advisor ranks.
“We are continuing to invest in advisors and have made updates to be more competitive in the market, as well as due to the regulatory environment,” another spokesperson said. “Our strategy and focus on early-career advisors and those in Community Markets have not changed.”
Merrill also has tweaked the formula it uses for calculating the guaranteed salaries in the CM and AG programs. The number will equal a broker’s 12-month gross production at his or her previous firm multiplied by 2.5 and divided by 5, she confirmed.
One headhunter estimated that the new formula would translate to a salary equaling about 120% of a broker’s former pay, though he noted that novice brokers do not always have easily calculable gross production numbers from former employers that did not use payout grids.
The Merrill spokesperson would not say how the formula has changed nor how it responds to changing regulations.
Merrill might be concerned about greater scrutiny of broker compensation emanating from the Securities and Exchange Commission’s new Regulation Best Interest, said one recruiter. Brokers who are dually registered as investment advisors, as are most at Merrill and other wirehouses, also must comply in that role with a fiduciary standard that could make a three-year asset transfer goal seem too aggressive, he said.