[quote=STL Indy]

I have a few questions about Merrill's POA program, if you don't mind.  I was contacted by a headhunter/recruiting firm that has setup an initial interview with ML.  The recruiter is telling me that the salary in the POA program was NOT a draw, and that you can earn commissions on everything you sell, in addition to the salary.

I already have my 7, 66 and insurance licenses so I'd want to go into production ASAP.  Problem is, I can't live off of the salary alone (for too long), even on the high end of their range and need to have the potential to earn at least $150k the first year.

Based on the research that I've done on these forums, reading old posts in another thread like the one below, it seems to actually be a draw (which goes against what the recruiter is telling me):

[quote=moneyadvisor] PC's are production credits. Transactional credits generated on the sale of investments. For example....Because you would have to do enough business to cover 3 months of your salary, before you would get paid on production above and beyond your salary, there would be no reason for you to sell A or B share funds, or take the upfront commision on annuities. If your salary is $40,000/yr......that's $3,333 per month. At a 40% payout, you would need to do $8,300 gross per month, this is equal to putting $150,000 per month into A share funds. But, they look at this quarterly. SO, if your salary is $9,999 per quarter, before you could collect commissions above your salary, you would have to Gross over $25,000 in the quarter. The program has fee based assett goals, so that guys can annuitize, and hopefully come close to replacing there salary when they graduate.[/quote]

I need to make $12k/month to pay my bills (although they would be quite less working for a wire, compared to being indy where I foot the bill for all marketing expenses, so lets say $10k.

If I could get a $60k salary (not likely, although the recruiter said the average range is $40-80k), I would need to make another $5k month in commissions above the salary to get to $10k/month.  Is that even possible with this POA program?

I guess it would be, if the salary was not a draw...

As an example, someone in the POA program is bring in $750k in assets each month.  $500k is in fee-based accounts to annuitize his book, and $250k is in VA's, mutual funds, fixed annuities, REIT's, whatever transactional business he can round up to get "paid now".

Let's say that monthly transactional business of $250k averaged 6% commission for a GDC of $15k @ 40% payout = $6000 income to rep.  Would the rep's paycheck be $11k that month, or $6k that month ($5k salary and he only got to keep the $1000 extra that he generated over the salary, hence the "draw").

Again, this recruiter is telling me that you get all of the commissions, ON TOP OF the salary, but I don't believe it (after seeing moneyadvisors post and trusting that info as legit) and wanted to ask some people here that I know are either in the POA program, just out of it, or perhaps run it as manager.  I just don't want to waste this manager's time and will probably cancel the interview if it is indeed a draw and I have no chance at seeing 5-figure monthly income until I'm into my 3rd year and off of salary.

Thanks in advance.

[/quote]

Are you kidding me?  $12k a month in year 1?  Unless you are really hooked in with a lot of people who are going to give you money I'd say fat chance.  In order to do that, you would most likely have to focus on one time high commission investments like variable annuities (about $3.6 million a year into VA's roughly) to make that kind of cheese.  The problem is that you would not be building an annuitized business, which is the real beauty of this business.  I think the assumed payout and commission (40% and 6%) are high if Merrill is offerring a salary, I would be conservative and assume 30% payout and 5% commision at a wirehouse (and that's a VA) in addition to your salary. 

[quote=STL Indy]

I guess it would be, if the salary was not a draw…

As an example, someone in the POA program is bring in $750k in assets each month.  $500k is in fee-based accounts to annuitize his book, and $250k is in VA's, mutual funds, fixed annuities, REIT's, whatever transactional business he can round up to get "paid now".

Let's say that monthly transactional business of $250k averaged 6% commission for a GDC of $15k @ 40% payout = $6000 income to rep.  Would the rep's paycheck be $11k that month, or $6k that month ($5k salary and he only got to keep the $1000 extra that he generated over the salary, hence the "draw").

[Quote]

6k.  It is a draw.

I think the assumed payout and commission (40% and 6%) are high if Merrill is offerring a salary, I would be conservative and assume 30% payout and 5% commision at a wirehouse (and that’s a VA) in addition to your salary. 

30% payout grid?  That sounds like a bank broker's grid, and at least they give you warm leads and book to call on.  I thought ML gave ~40% on transactional stuff? 

5% on VA's?  WRL pays 7%, Hancock's VA is in that range too.  I was using 6% as a rough average for all transactional commission products though (VA's, A shares, etc), figuring that was fairly conservative.  So, ML would not give me the full commish on a 7% VA and even after that run it through a grid?  Wow.

I'm not terribly concerned with the 15m AUM requirement after 2yrs in the program, I just wanted to know how you get paid as a POA participant.

Just to run some numbers though, and where I'm having an issue with even wanting to goto this interview.  The successful POA grad will have 15mil AUM (10 of which is annuitized).  As an example:

10m AUM in 24months, all fee based stuff, figure 1% payout.

5m AUM in 24months, all transactional, figure 5% average commission.

In those 24 months of the program, you've brought in 250k GDC to the firm just on the 5 million transactional alone (assuming only an average 5% commission). The 10m would be bringing in 100k GDC, starting off the 3rd year, and since you would build up those funds over time in the 24 months, it might only be worth ~40k in combined GDC those first 2yrs depending on the timing of when you acquired the business.  Just for grins though, we'll use $40k of GDC for the fee based business that you brought in (10mil).

That's $290k GDC that you made for ML, but you only earned a $40-50k salary while doing it? (plus some small cash bonuses).  Seems like a win-win for Merrill from how I'm seeing it.  Then, for the guys that maybe don't quite make it and ultimately wash out (but did get ML some business), I'm sure that book will just get passed around the office while the wash out has no chance at ACAT'ing them over to his new BD (being a failed ML trainee), unless he can do some major spin control. 

[quote=Scorpio]6k.  It is a draw.
[/quote]

Ouch.  Thank you for confirming.  I guess this recruiter is just blowing smoke wanting me to go in this interview and have the manager "wow" me or something.  I think I'll call the ML manager to cancel the interview so I don't waste each other's time.  This headhunter is swearing up and down that it's not a draw though.

I doubt that headhunter even understands how a draw works.  Most of the POAs in my office don’t even understand it.

[quote=dude]I was using 6% as a rough average for all transactional commission products though (VA's, A shares, etc), figuring that was fairly conservative.  [/quote]

I think your view of the transactional side of this business is a little askew, see below:

This is a fairly typical breakdown of the commissions on a mutual fund at different dollar amounts (from American Funds website).

And this is a fairly typical breakdown of the commissions on a unit investment trust at different dollar amounts (from First Trust website).

Volume Discounts

The commissions on individual stocks and bonds very by firm and broker, but typically are even lower than the above (although some charge a fee going in and going out).

As you can see, if you are bringing in decent size clients, you will be averaging closer to 2-3% on new money.

[quote=Scorpio]I doubt that headhunter even understands how a draw works.  Most of the POAs in my office don't even understand it. [/quote]

Most likely.  I'm thinking that is the case here.

[quote=lawsucks]

I think your view of the transactional side of this business is a little askew, see below:[/quote]

Thanks.  Those numbers might be accurate for your primary market, and the products that you typically sell, but not in my case .  For the investors I market to, and the transactional products that I tend to use most often, it's more of a 5-6% average commission.

Has anyone here taken the 4-hour day in the life of a FA assessment at ML?  I took mine today.  It was a lot of fun.  If I could work four hours like that everyday and have it feel like only one hour then this is a career that I really need to consider.

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I can’t say that I nailed the assessment, but in reality I don’t think that it is even close to possible to do a perfect job.  What is everyone else’s opinion?

I’m happy to see that ML will put so much effort into assessing the potential employees.  I’m sure that this assessment program does not come cheap.  It is good to know that they will work hard in the early stages to weed out those who will not work out.

WM

[quote=STL Indy]

[quote=Scorpio]I doubt that headhunter even
understands how a draw works.  Most of the POAs in my office don’t
even understand it. [/quote]

Most likely.  I'm thinking that is the case here.

[quote=lawsucks]

I think your view of the transactional side of this business is a little askew, see below:[/quote]

Thanks.  Those numbers might be accurate for your primary market, and the products that you typically sell, but not in my case .  For the investors I market to, and the transactional products that I tend to use most often, it's more of a 5-6% average commission.

[quote=rightway]
5-6% a trade.  And we wonder about the regulation.
[/quote]

I know my clients, thank you very much, and have never had an issue with compliance.   Who are you to judge my product selection to my niche market?  You don't know me, who I work with, and what products I normally recommend.  I target specific types of clients with my marketing strategy.  Because of this, in most cases they have very similar circumstances to each other and require similar solutions.  I don't try and be all things to all people, I work with a specific type of client.

S-L-I-N-G those annuities boy..... Go get em..... Make sure to tell them about that 8-12 year surrender schedule.....

I am sure your 'targeted' clients all get a comprehensive wealth management analysis, retirement income projections, advice on estate planning, help with alternative cash management strategies, etc, etc...

Oh wait..... um.... no... they are probably just getting a bonused annuity.....

[quote=blarmston]

Oh wait..... um.... no... they are probably just getting a bonused annuity.....

[/quote]

I never sell bonus VA's, I do alot of non-bonus VA's and the income rider's are very popular with my niche market.  I'm not peddling crap EIA's with long surrenders, most of my VA's are 5-7yr.  

As for your other comments, yes, all of my clients get that when I put my series 66 hat on and take my series 7 hat off.

Anyway, you're going OT for this thread, my question was answered already (salary in the POA program is a draw), thanks anyway.

Help! Does anyone out there still have a 2006, 2007, and/or 2008 POA Handbook? I lost mine and desperately need a copy. I’ll pay for copying and FedEx.