New ML comp plan rumors

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leftml's picture
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Here are some details on the new ml comp plan. All details are just rumors at this point.

No pay on households under 100k even if the client is in a fee based platform. (I know this is fact)

Flat 35% grid across all product types.

Starting at LOS 5, a 1% bump on payout for every additional 5 LOS.

Grid flips at 1.8 million to 60% payout.

I love how BAC/ML lowered the grid for all producers under 1.8 million but would not tell anyone until the new contract was signed.

bondo's picture
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Any rumors about how they are treating production for a team?  I'm sure there is no way in hell they would do as UBS and pay based on the production of the highest generating team member.
 
I don't think it is any surprise the grid is being cut.  It is important to maintain the proper Wal-Mart of banking atmosphere.

BAI?'s picture
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RUMOR RUMOR RUMOR......the only thing we can do is wait and see exactly what it will be.  If you are correct leftml I will do thirty push ups!   Plus a 35% grid is great for BAI folk’s god knows our grid is not in line with industry standard.  Also, I just don't see how BofA would cut comp the first year and upset so many people.  Then again they have to pay for those retention checks some how! 

BukiRob's picture
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BAI? wrote:
RUMOR RUMOR RUMOR......the only thing we can do is wait and see exactly what it will be.  If you are correct leftml I will do thirty push ups!   Plus a 35% grid is great for BAI folk’s god knows our grid is not in line with industry standard.  Also, I just don't see how BofA would cut comp the first year and upset so many people.  Then again they have to pay for those retention checks some how! 
 
LOL and the ROYAL screw job on the retention didnt upset people????  Obviously, until it is in writing then its all speculation but if they were as regressive with the retention what makes you think they will be any less regressive with compensation?

Phan2om's picture
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OK- this is just a rumour and I doubt it's correct, but let me just have some fun with it:
 
Suppose ML Management is thinking, "OK, we just basically told 60% of the sales force to go screw themselves (no retention package), so we'll cut their pay, and this will insure that most of them walk.  Then we will distribute their accounts to the 1/3 that stay, and their production will increase substantially- after all, they won't take all of their accounts.  Then we reduce the payout on the remaining sales force, but they are making more money b/c of more production.  ML Management has just managed to do what they've always wanted to do: cut the variable compensation expense making the company more profitable.  Then, ML management can take a huge management bonuses for being so smart and continue to rape and pillage corporate America.  They know they easy game of raping and pillaging is over, but if they can reduce FA Compensation, they can continue their game.
 
Just a warm thought about our "leadership"

cubfan1404's picture
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Are those cash rates or do they take the usual 10% FACAAP out of that?

BACFA's picture
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I heard from multiple sources that existing BAI will still keep the "trailer" grid.  It will go away when the ML and BAI grids are aligned at the end of next year.  And I agree with BAI?, if anyone asked if I wanted to keep the old BAI grid or move to an unknown ML grid, I would take the latter.

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Correct me if I am wrong, BAI FA's don't get paid on money markets, 12B-1, or CD's, is that right? They get a haircut on VA's down to the tune of 4% and 35% payout on the top end, too? I think the only thing they got a higher payout on was proprietary fee based managed account. I was there years ago but it was such a bad experience that I had to take drugs to erase those memories. Well, and I have a little drinking problem, too. But that started when I was with BAI, I just haven't quit yet.

MERRILLBANKER's picture
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Phan2om wrote: OK- this is just a rumour and I doubt it's correct, but let me just have some fun with it:
 
Suppose ML Management is thinking, "OK, we just basically told 60% of the sales force to go screw themselves (no retention package), so we'll cut their pay, and this will insure that most of them walk.  Then we will distribute their accounts to the 1/3 that stay, and their production will increase substantially- after all, they won't take all of their accounts.  Then we reduce the payout on the remaining sales force, but they are making more money b/c of more production.  ML Management has just managed to do what they've always wanted to do: cut the variable compensation expense making the company more profitable.  Then, ML management can take a huge management bonuses for being so smart and continue to rape and pillage corporate America.  They know they easy game of raping and pillaging is over, but if they can reduce FA Compensation, they can continue their game.
 
Just a warm thought about our "leadership"

I think you maybe onto something here.

snaggletooth's picture
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leftml wrote:Here are some details on the new ml comp plan. All details are just rumors at this point. No pay on households under 100k even if the client is in a fee based platform. (I know this is fact) Flat 35% grid across all product types. Starting at LOS 5, a 1% bump on payout for every additional 5 LOS. Grid flips at 1.8 million to 60% payout. I love how BAC/ML lowered the grid for all producers under 1.8 million but would not tell anyone until the new contract was signed.
 
Something I was thinking about today: 

 
If a MER rep was doing 500k last year, at 40% grid, he'd be netting 200k.
 
So, with the takeover, let's say BAC drops the payout to 35% and doesn't pay on households of less than 100k. 
 
When I was at MER, you could get away with householding small accounts to non-related accounts.  However, I suspect BAC will crack down on this.  Let's assume the broker does 25k/year from these lower households.
 
Now, due to market performance, they are receiving 30% less in revenue, at a 35% grid and not getting paid the 25k in low households.  That puts this same producer at 116k net.
 
That's not even including losing assets.  That's presumably a very big paycut.
 
 

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Mucho, BAI Reps are not allowed to broker CD's (you have to move the money to your "partner" so he can meet his goals). That's taking dirt out of boss' hole. THey DO get 12b-1's, just at 25%. THey also get a little love on MMKTs somewhere around 5-10 Bps. Their bigger issues are no research since ole' Ken had too much of capital markets and the BAI guys can't recommend a stock without a "Buy". That left around 200 stocks no one had ever heard of. I had two separate managers suggest I mark trades unsolicited to put up more business in non-fee based months.   I was amazed. I responded that I wasn't willing to give up my license to help him hit some goal. The regulators ought to figure out a way to check that one.

Much, one more thing, always remember, you can't lose with booze.

Phan2om's picture
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I heard today that the 3rd, 4th, and 5th quintile FAs are going to be, in the words of this manager I spoke with, "very unhappy." 

So when are they going to release this? Hmmm, maybe we will get an email on Wednesday AM that there will be a pre-recorded Direct Broadcast with no replays airing at 1 PM.  And if you have any questions, go see your manager!
 
The funny thing is that a 3rd quintile guy at Merrill is still a pretty good producer at most firms.  I don't know why everybody is so worried about BofA, looks like Merrill's own management is doing a pretty good job of banging the sales force.

bondo's picture
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Phan2om wrote: I don't know why everybody is so worried about BofA, looks like Merrill's own management is doing a pretty good job of banging the sales force.
 
I think you should check out a post on the first page of this thread.  The author has a very interesting theory and one that sure could have legs, especially based on the message sent by the retention package.  You might even know the author of that post.

ReaganWeNeedU's picture
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This thread started off with RUMORS.
 
I know several complex managers at both firms, and a couple regional managers at both firms.  I have worked for both firms.  I am employed by one of the firms.
 
NOBODY AT ANY LEVEL BELOW THE C-LEVEL KNOWS ANYTHING AT THIS POINT. 
 
I, too, am anxious about potential changes and how I will be personally impacted.
 
Note to all readers:  DISREGARD all the crap you've read in this thread.  It's all speculation, and nothing more. 
 
It's amazing the b.s. some of the rumor spreaders can spread. 
 
I like this forum, but this is a thread where I think that if most if the posters allocated more of their time towards their their crappy bitness then they would if they actually were a good producer.
 
After 5 years of occasionally checking out the forum, and finally posting my first one a few weeks ago, I'm now thinking I'm wasting my time.  It appears I'm hanging out with a bunch of low life 200k producers trying to figure out whether a 35% payout vs at "fill in the blank" payout is going to make a substantial difference in their pathetic life.   (FYI, 90% of a tiny pie is sh*&ty little paycheck) 
 
HEY LOSERS.  LOGOFF THIS SITE AND GET TO WORK.   Allow regular people to exchange ideas here. 

badmove?'s picture
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Reagan you should be a motivational speaker, good job. As an aside, in general how do quintiles breakdown for LOS >5 in general. What are the levels? Just curious, always heard about the quintiles don't know the levels. Thanks.

Say What's picture
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Will new plan be out this week?I just got notice ALL Christmas parties are cancelled

Phan2om's picture
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Reagan wrote:
 
"I like this forum, but this is a thread where I think that if most if the posters allocated more of their time towards their their crappy bitness then they would if they actually were a good producer"
 
Ummm...I am north of 1 Myn and do it without a "team" (and I was at the meeting where Ken Lewis appeared and was applauded), and If you "know" people at both firms and they know nothing, then you are talking to the wrong people.  This thread is rumour, but I did speak with a manager on Friday who told me the lower quintile FAs were going to be "extremely unhappy." Maybe this director is smoking crack- who knows?
 
FYI, there are guys in my office that are good guys and produce much less than I- I don't judge them on their production.  Anyone who defines somebody by their production is a true loser.

Phan2om's picture
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Bondo- Thanks for the reference to page 1 ! A very intelligent post! 

leftml's picture
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I guess I should have qualified where I received the rumor. It's from an old co worker at the ML branch where I worked. He received the info from our complex manager after he signed his contract. New comp plan should be out this week.

I do know there will be 0 payout on all accounts under 100k even if fee based. This from a member of the ACTM.

fritz's picture
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leftml wrote:I guess I should have qualified where I received the rumor. It's from an old co worker at the ML branch where I worked. He received the info from our complex manager after he signed his contract. New comp plan should be out this week. I do know there will be 0 payout on all accounts under 100k even if fee based. This from a member of the ACTM.
 
thats nice..so an account that was 200K in Jan is now 95K (possibly) and now do not get paid.  What kind of idiot in management would penalize a FA and not pay him on that account.  IF thats true and that trend spreads to other shops its says alot about where this biz is heading.

YHWY's picture
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This is honestly not meant to be confrontational. I think it's very obvious where the biz is heading. There will be a few wirehouses who only tolerate huge producers and very large clients and the entire other portion of the business will be serviced by (formerly) average (and below) producers at indys and small, boutique firms. The writing's on the wall, from where I sit, anyway. The thing I'd like to point out is that the wirehouses' position that a practice generating under $600k (or whatever the number is at your wirehouse) isn't profitable is simply not true (period, end of sentence).

fritz's picture
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YHWY wrote:This is honestly not meant to be confrontational. I think it's very obvious where the biz is heading. There will be a few wirehouses who only tolerate huge producers and very large clients and the entire other portion of the business will be serviced by (formerly) average (and below) producers at indys and small, boutique firms. The writing's on the wall, from where I sit, anyway. The thing I'd like to point out is that the wirehouses' position that a practice generating under $600k (or whatever the number is at your wirehouse) isn't profitable is simply not true (period, end of sentence).
 
Think your right on all counts, but guess I would ask who are the wirehouses? Do not think MS will make it alone for more than a few more months and not sure MER or WS/AGE will be anything like now going forward after BAC/WFC puts their footprint into it.  Do agree only big guys/teams will probably be around if this enviroment stays, and I think even after rally comes it will likely be led with a long period of malaise by investors, so only huge books who can make it off fix income and skinny management fees will thrive. Think 1.5-2% management fee guys are at as much a dead end as the tranactional guys.
 
My MS branch just gave a guy doing 375K T-12 at MER a 175% up front deal, so anyone who says under 600K not profitable, tell John Mack, he see's it different.
 
Anyone been drinking more than usual the past 2 months?

YHWY's picture
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All I could offer is a wild guess. My guess would be that Merrill Lynch will keep it's name going forward and continue to be the premier "wirehouse", MS could well keep its name even if absorbed, beyond that, UBS, Smith Barney???????? I predict that WS/AGE will be sold, yet again by Wells...to whom, I haven't a guess, but I don't think Wells wants to integrate a huge brokerage unit, just my $.02. The part that nauseates me is that stand-alone brokerages were told that they needed big bank backing to complete and survive and it was the aweful, corrupt, incompetent models of the banks that have destroyed the brokerage model. (My example, of course, is that AGE was very profitable, carried NO debt, paid a solid dividend and had $2 bil in the bank and that wasn't an aceptable and sustainable business model, now they are a piece of debris sinking on the shoulders of capsized WB. It boggles the mind.

YHWY's picture
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Maybe so. If so, I certainly had no idea how deep that hole was.

ML for Life's picture
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I've been at ML for over 20yrs...so I can only speak regarding the wirehouses. My theory....Advisors are headed in the same direction as our firms. Smaller individual advisors will merge or be"acquired" by larger annuitized teams. Instead of 2 and 3 man/women teams running 500+m in assets. We will be 5 or 7 man/women teams running a few billion in assets, each advisor with there own speciality or niche... almost like a law practice. There will be senior partners and associates and the firms will leave how compensation gets spilt to team partners. This is how they just handled the rentention packages...if you were in a team, you were able to split up the package among your FA team members. The larger FA's (getting 75% of TT) were able to give whatever they wanted to their junior partners(those who got zero or 25% of TT). Which to the credit of most of the bigger ML FA's...they did just that(taking care of their junior members). I think if you want to be a stand alone advisor at ML doing 300k...it's going to be rough. Being the largest team in my complex we've already reached out to a guy in our office who we feel is high quality, smart, and a good advisor.
He brings a decent size business but its hard for one person at ML(with all the products and services) to handle their clients effectively. We also reached out to a rookie about joint prospecting via seminars(dangling the carrot of work your butt off and fill those rooms and maybe we'll bring you on the team.) The next 12 months inn this business is going to be real interesting....I just hope in a good way.

Exigent's picture
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That's a fact. Sontag gave us word on Friday...

bondo's picture
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fritz wrote: 
thats nice..so an account that was 200K in Jan is now 95K (possibly) and now do not get paid.  What kind of idiot in management would penalize a FA and not pay him on that account.  IF thats true and that trend spreads to other shops its says alot about where this biz is heading.
 
That philosophy is already in place.  Any net new households brought in this year that drop under 250k are no longer considered net new households.

bondo's picture
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Exigent wrote:That's a fact. Sontag gave us word on Friday...
 
What's a fact?  The whole rumor or just parts?

Exigent's picture
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No Holiday parties this year. We lost all of our deposits because we are canceling so late. 

Say What's picture
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I'd like to respond to Reagan's comments. First, a LOT of the "rumors"
over the last few months have been true. Our manager said the talk of
the retention #s were BS. He was right...the package was worse
than the rumors for the vast majority of FAs. Second, on a lot of
discussion groups like on Marketwatch you get lots of bitter, cynical
people. I do not get that feeling at all reading these. I see curious
professionals. And many of you are quite funny. have you read the
responses to the post from 4x4 on the drug testing at MS? Who needs to
watch TV? Just grab a beer and read these.Also, I would like to thank Phan2om for reminding us to not judge FAs by their production. We've got some very high quality people in our ML office that won't be with us in 6 months. These are good guys with mortgages and families. Frankly, I'd much rather have some these lower producers as my neighbor than a few big producers I know.I always thought I'd retire from ML afer 20+ years. Now...who knows.

Sportsfreakbob's picture
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fritz wrote:leftml wrote:I guess I should have qualified where I received the rumor. It's from an old co worker at the ML branch where I worked. He received the info from our complex manager after he signed his contract. New comp plan should be out this week. I do know there will be 0 payout on all accounts under 100k even if fee based. This from a member of the ACTM.
 
thats nice..so an account that was 200K in Jan is now 95K (possibly) and now do not get paid.  What kind of idiot in management would penalize a FA and not pay him on that account.  IF thats true and that trend spreads to other shops its says alot about where this biz is heading.It WILL be spreading to other shops. And you can pretty much take that to the bank.

Exigent's picture
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Here are a few random thoughts on the current situation at ML. Lower quintile guys are more profitable for the firm because they keep less of what they kill. The house always win. ML is doing two things wrong... They are forcing their rising stars out and forcing the lower quintile guys out. I have spoken to MS and SSMB. I am thinking about talking with UBS this week. If the shareholders vote on Dec 5th that the companies should not merge, ML will be out of business by December 6th. I will have a definitive plan B by the time Dec 5th rolls around. 

bronson2000's picture
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Lower producers are more profitable for the firm???? Factoring fixed costs( tel, tech, , benefits, registration, office space, e&o, etc, etc,) the break even is roughly 150k-200k. Depending on the geographic area you're in (office space more in NYC than Kalamazoo.) it could be more.

Big producers especially fee based are always more profitable.

I'm in independent, but having been in mgmt at a wirehouse these are the facts.

Exigent's picture
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It is counter intuitive but... they are more profitable to the firm because they fall lower on the grid and the house keeps more of their revenue. The only exception is if you get a guy doing an exceptionally low amount of business. 

fritz's picture
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Exigent wrote:It is counter intuitive but... they are more profitable to the firm because they fall lower on the grid and the house keeps more of their revenue. The only exception is if you get a guy doing an exceptionally low amount of business. 
 
Always wondered how an office which has 7 bodies and 14 empty seats is losing by having a guy doing even 150K??  With a payout of 30%, how can 70% of 150K minus some minimal expenses be a loser for a firm.  Someone please explain that..
 
Couple of friends for our family have about 4-5 Subways and they hope to net 40-60K a year from each.  One poor pruducing broker makes more for a firm than a Subway shop does for one whole year, that a lot of sandwiches to make.

2wheeledbeemer's picture
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fritz wrote:Exigent wrote:It is counter intuitive but... they are more profitable to the firm because they fall lower on the grid and the house keeps more of their revenue. The only exception is if you get a guy doing an exceptionally low amount of business. 
 
Always wondered how an office which has 7 bodies and 14 empty seats is losing by having a guy doing even 150K??  With a payout of 30%, how can 70% of 150K minus some minimal expenses be a loser for a firm.  Someone please explain that..
 
Couple of friends for our family have about 4-5 Subways and they hope to net 40-60K a year from each.  One poor pruducing broker makes more for a firm than a Subway shop does for one whole year, that a lot of sandwiches to make.
 
My old AGE manager used to always say that it took about 7k a month to have a butt in a seat in the office.  I don't remember if that was gross or net, but he made it sound like the technology costs were the biggest pieces.

Say What's picture
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Fritz,Great point! My only guess is the firm is using questionable math. If they take tons of "fixed" costs from NY and divide it by the # of FAs, they might come up with a false break-even amount on a per FA basis. But if you fire all $150k producers, I certainly don't think this reduces their fixed costs! I'd love to see these guys in mngt a year from now. "Mmmm, we let those low producers go and were not making anymore $$. What's up?" No Sh*t!?

Say What's picture
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Now it's Mid December before comp plan is out! I guess they don't want to shock guys before the BAC vote. Wow, ML has handled this fiasco really bad.

Borker Boy's picture
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I love how the ML guys refer to their being saved by BAC as a "merger."
 
I believe the more appropriate word is aquisition.

Phan2om's picture
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Yea, got the email today that retention was being delayed until December.  Funny, my director keeps telling me how "great" the compensation plan is going to be, but it keeps getting delayed- i suspect that the compensation plan is actually "under review" from BofA, and it's not going to be so "great"
They also cancelled the Holiday Parties, but at this date we forfeit all the deposits.  Another great move.  Either cancel early or hold the party.  C'mon guys, how hard was it to drop the pom poms and make this decision???
Add to these two decisions the "Retention Package on Mushrooms" and you begin to seriously question what the hell is goin on here.
 
I'm beginning to think this firm is a never ending train wreck.

bancofamigo's picture
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Phan2om, they haven't paid it yet?  I thought y'all were getting it right after you signed the agreement.

ezmoney's picture
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It couldn't happen to better bunch of crooks. Merger my a$$!

Hank Moody's picture
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Say What wrote:Now it's Mid December before comp plan is out! I guess they don't want to shock guys before the BAC vote. Wow, ML has handled this fiasco really bad.
ML is BAC's bitch. ML was saved from the brink of collapse. Be grateful that you even have a place to go in the morning.

Phan2om's picture
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No Banco, we don't get the "bribe" until after the "merger" (LOL, Acquisition or bailout) is complete.

YHWY's picture
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By show of hands: Who would have believed or imagined a year ago what the brokerage firm landscape (not to mention stock market) would look like today?? (I am sitting firmly on both hands)

bondo's picture
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Phan2om wrote:I'm beginning to think this firm is a never ending train wreck.
 
There is no more firm, at least in another month.  It is then a bank.

cubfan1404's picture
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Only as much as Smith Barney is a bank.  No more, no less.

Phan2om's picture
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I really, really hope your correct, Cubfan.  If ML becomes a Smith Barney, I am cool- talking to people at BAC, i'm not so sure.  If you look at the culture at BAC, it is very, very different from ML.  Time will tell.

Exigent's picture
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The timing is ingenious on the bank's part. They had everyone sign a document when they haven't finished changing the rules and they had strong participation. 

kappa1997's picture
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The new grid is in the hands of managers but they aren't sharing until the vote. Can anyone tell me what the BAC grid looks like?

bondo's picture
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kappa1997 wrote:
The new grid is in the hands of managers but they aren't sharing until the vote. Can anyone tell me what the BAC grid looks like?
 
Don't know, but there were once again lots of closed doors for the first quintile guys around my office this afternoon.

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