More “Project Thunder” Painkillers for Merrill Brokers, While Sieg Tags Big 2022 Comp Changes As Unlikely
Merrill Lynch Wealth Management announced Wednesday another round of policy changes as part of its “Project Thunder” campaign, which, so far, has not addressed any compensation issues, despite persistent grousing among brokers about prior years’ haircuts to their pay.
But separately, Merrill President Andy Sieg sought to reassure brokers there would be few substantive changes in the 2022 compensation plan that would nick their take-home pay.
Sieg told brokers during a town hall on Sept. 14 not to expect any “large-scale change” in their compensation plans for 2022, according to a recording of his remarks reviewed by AdvisorHub. The executive, who has led the Merrill brokerage since 2017, acknowledged the negative response to modifications to their pay plan in recent years.
Any tweaks Merrill does make for 2022 would be laid out in the firm’s annual compensation announcement to come in a “couple months,” Sieg said, according to two internal sources familiar with his remarks.
A Merrill spokesperson declined to comment on what changes the firm could make or whether it would modify some of the key targets in its “growth grid” that penalizes and rewards brokers for adding assets.
For 2021, Merrill kept its grid hurdles, payouts and growth requirements steady but eliminated pay on sub-$250,000 accounts.
In response to a broker question at the town hall, Sieg also reassured the firm’s sales force that Merrill had no plans to do away with the fundamental compensation grid, which pays brokers a range of between 34% and 50% of the revenue they generate.
“We have no plans–no intentions–to get rid of the grid. Full stop,” Sieg said. “Anybody who calls you on the phone purporting to be your friend and telling you they heard that, is lying to you. They’re lying to you. I can’t be more clear.”
Sieg delivered his remarks at the town hall while again acknowledging the firm continues to struggle with advisors leaving for the competition.
“Advisor attrition right now is higher than we’d like,” Sieg said. “It’s a topic we have talked about. We are dealing with it.”
To that end, Merrill on Wednesday moved on to the fourth installment of its “Project Thunder” campaign aimed at alleviating broker concerns. The tweaks, or what Merrill management calls “wins,” this week include plans to:
- Update the “Merrill One” advisory platform to allow brokers to enter multiple work orders at the same time.
- Reduce turnaround times for clients who are looking to join parent Bank of America’s donor-advised funds.
- Make more lending specialists available to brokers to help their clients with mortgages.
The changes expand a list of what have so far been mostly procedural tweaks by Merrill managers— from relaxing rules about onboarding customers with marijuana businesses to granting some brokers exemptions when looking to bring family members directly onto their team. Merrill has also allowed brokers more leeway in sending greeting cards to customers and prospects.
Brokers internally and some who have left say the campaign still has not addressed the source of their chief grievances, including that Merrill in 2019 began withholding from brokers’ pay the first 3% of monthly revenue they generate, a change executives said was intended to rein in compensation costs that outpaced revenue increases.
The firm also in 2018 introduced a carrot-and-stick growth-grid system under which brokers must add at least three net new households to avoid a 100-basis point reduction in their payout. They lose a percentage point if they do not grow customer assets by 2.5% or can earn a point by adding more than six net new households or growing assets by 5% or more.
Merrill raised brokers’ growth targets in 2019 and 2020, but modified the 2020 plan in June last year to acknowledge the effects of the outbreak of Covid-19 on broker prospecting and kept the three-household requirement in place for 2021.
Merrill in recent years has seen a steady outflow of veteran brokers with regular departures of heavy-hitting teams. In two recent examples, a team of five lifers with a $1.75 billion book left on Monday in Colorado to start their own advisory firm after another team of lifers with a $1 billion book left on Friday for RBC Wealth Management-U.S. in Oregon.
“Business Insider” earlier reported Sieg’s commentary on compensation at the town hall.