Last November, major brokerage firms started announcing their compensation plans for the year ahead. While most remained relatively unchanged, with a few minor tweaks here and there, Merrill Lynch gave their comp plan its first major overhaul since 2009, stating the industry shift to advisory business as a big motivator for these changes.
The biggest changes to their comp plan were:
- Cutting down on brokerage transactions
- Raising production and growth hurdles — Advisors now need to produce more in order to maintain the same payouts
- A raise to the net new household threshold on brokers’ growth grid — Advisors must add at least four new households to avoid a 100 basis-point cut to payout
- A cut in credit earned for certain types of transactions (being instated in March)
It’s now been a few months since these changes were announced and the aftershock is starting to take effect. It’s no surprise that many of the firm’s 11,000 brokers were not thrilled with the new compensation plan, as it has the potential for deep (and possibly negative) implications for their businesses. With the changes to their 2023 plan, those with fewer fee-based accounts will be more heavily penalized, as will those who rely more on commissioned-based revenue.
Since the new compensation plan went into effect, it’s been reported that advisors have been leaving Merrill in waves, with multiple multi-million-dollar teams leaving within the last week. Some of the changes to Merrill’s 2023 comp plan won’t go into effect until later in the year and as we get closer to changes being instated, in addition to brokers feeling the effects of the decline in payout, we anticipate more exodus from Merrill to follow and greater numbers looking for a new place to call home.
Are you a Merrill advisor wondering what your next step should be? The team at 3xEquity can help you understand the challenges (and opportunities) that lay ahead of you in 2023 and beyond – and best of all, our services are completely free to you. You’ll remain 100% anonymous all while you gain clarity on this big shift.
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