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 Until now, Merrill Lynch Wealth Management's top recognition club
was its "Circle of Champions" for financial advisers who produced $4
million of commissions and fees, or received 2.5 million of
"production credits" for sales of products and services that
qualified them for the firm's top sales payout.
In a sign that the Bank of America Corp <BAC.N> subsidiary expects
new account programs and technologies to unleash new sales power,
Merrill's new club doubles the criteria for entry as well as the
cash awarded to its most elite advisers.
The new "Pinnacle Club" will pay its members $10,000 in cash and
additional benefits if they produce $8 million of revenue or build
up 5 million of production credits.
Club membership also gives members bragging rights as elite brokers,
the ability to advertise their status on their websites, and
priority when accounts of departing brokers are redistributed or
when customers are referred to the broker-dealer from other parts of
Bank of America, according to a description of the recognition clubs
in Merrill's 2014 compensation booklet.
Brokers who qualify for Pinnacle as well as for Merrill's seven
lower-tier recognition clubs also can participate with their
significant others in "Top Advisor Summits" that are usually held
over several days in resort areas.
In reporting first-quarter earnings last week, Merrill said its
13,725 brokers were on target to produce an average of $1.06 million
each this year, one of the highest averages in the brokerage
industry. The average is skewed, however, by heavy hitters who could
qualify for the new club. Fewer than 5,200 of its advisers had $1
million or more of production in 2013.
A Merrill spokeswoman declined to comment about the new club.
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Spokespeople at competitors such as Morgan Stanley <MS.N>, Wells
Fargo Advisors <WFC.N> and UBS Wealth Management Americas <UBSN.VX>,
whose recognition clubs top out for brokers with $2 million to $3
million of annual revenue, did not immediately respond to questions
about whether they would raise their top levels.
Brokerage firms are sensitive about discussing sales incentives as
the U.S. Securities and Exchange Commission considers imposing a
higher standard of customer care on their sales practices and the
Financial Industry Regulatory Authority is warning the firms to vet
potential hires more carefully.
Broker-dealers can sell any product considered "suitable" for a
particular customer's net worth and risk appetite, even if they
choose one that is more lucrative to the firm or adviser. Investment
advisers who directly manage money are held to a higher standard
that requires them to put their customers' interests ahead of their
own.
The Dodd-Frank financial reform bill directs the SEC to decide
whether to conduct studies on the care standards and decide whether
to unify them.
Merrill's compensation guide notes that advisers who have received
internal admonishments or were subject to action by any U.S.
securities regulator cannot participate in a recognition club for
the year these occurred.
(Reporting by Jed Horowitz; editing by Lisa Von Ahn)
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