Beginning at the end of next year, Merrill Lynch advisors with 10 or more years experience, who fail to produce at least $250,000 in annual client commissions and fees, will be demoted, Annie Gasparro of Dow Jones Newswires reported, via Financial Advisor.Those who don’t make the cut will either be told to leave entirely, or ousted to a lower-ranking position such as a client associate.
It’s the first time Merrill Lynch has ever implemented a flat production minimum.
Like other big brokerages, Merrill Lynch traditionally discouraged this class of brokers from staying with the company by paying them less, using a “penalty box” on its pay grid.
Apparently the new minimum isn’t totally different from that which exists under the penalty box; what is different is that now instead of being prodded to leave, idle advisors will “be forced out.”
Though penalties have reportedly stiffened over the years, making it harder for veterans “to coast at low levels,” obviously they have not been intimidating enough to advisors, so Merrill has decided to go on the offensive.
At of Q3, Merrill had 15,340 financial advisors. Their average annualized production is about $840,000 each.
The bank isn’t the first to try this approach; last year UBS Wealth Management Americas slashed the jobs of 650 advisors who failed to break the $250,000 benchmark.
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