[quote=BACFA]

Monthly incentives are based on 47% payout.

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My comments are nested within the previous post below:

[quote=FADavo]

As stated, the monthly payout is really difficult to hit because of how you hit the grid.  I think you hit the grid at 15% or maybe 20% regardless of how well you are doing during the PMD program.  If you do the numbers, that means you would have to have between a 25 and 35 K month of PCs (depending on what the percentage is) just to exceed that 5K in salary.  That is obviously pretty difficult when you are just starting on the building of your book, as that is 300K to 420K annualized production, or essentially the production of a well trailed 40-50MM book.  Its not impossible, but its pretty damn unlikely at least until LOS 2-3.  

The grid is 47% for the first two years and then drops to 43% and then to 38% at graduation (or something close to that; everytime I write about the PMD program, I don't have the Program Guide next to me!).  For the monthly incentive calculation:  1. Calculate your monthly PC's on the 47% grid.  2. Subtract your monthly salary. 3. Subtract 1/3 of the previous quarter's bonus.  So for a scenario with $20,000 PCs in a month, a $5,000 monthly salary, and 1/3 quarterly bonus of $1,000: $20,000 X 47%-$5000-$1000 = $3600 ontop of the $5K Salary.

(Something that the Guide doesn't cover is whether you still get the Monthly Incentive if you didn't qualify for last quarter's bonus.)

The quarterly bonuses are based on simply meeting the hurdles, and you get a 15% payout of production ON TOP of your salary.  These are much easier to hit because, well, if you are not hitting them, you probably wont be around long.  

Yes, quarterly is much easier hit.  You qualify just by hiting the hurdles. Monthly is harder becasue you have make at least your salary before any of it pays out.

as far as the salary goes, it starts to trail off after LOS 12, BUT LOS is actually about 19 months after you start.  I think what they told me was that they take your salary and "smooth" a reduction to 36K by the end of LOS 36 (end of PMD program).  so if you are making 50K, then they would reduce your salary starting the first quarter of year 2 of production by $1500 annualized.  The annualized is key because you will not really see that large a reduction in what you are actually paid for a bit.  I have not done the numbers but I am guessing there is a meeting point some time in late year 2 and early year 3 at which time your "average" grid production starts to exceed your salary.

I didn't delve too deeply into this section.  The way I read it (and again, sorry no guide in front of me), is that they calculate the reduction by yourannual salary and subtracting $35,000.  You will lose a third of that difference after each year.  Not sure how they break that down monthly but I would assume your monthly check drops immediately.  For example, annual salary is $50,000.  $50,000-$35,000=$15,000.  You lose a third of that each year, so 2nd year salary will be $50,000-$5,000 =  $45,000. Third year is down to $40,000.  Fourth is all commissions.

As stated, the recruiters will map this for you.  The lady I spoke with mapped pay for me over the phone.  I asked what i would make if I simply met the minimum hurdles.  It was 20% more than salary by LOS 12, 60% by LOS 24 and a bit over 100% by LOS 36.  I do not think there is a scenario in which you are making less than 6 figures by LOS 36 and are still employed by ML.  I could be wrong about this, but I did not see how it would work (numbers wise).  

That math doesn't sound right at all.  If first year hurdle is $40,000, then the quarterly bonus of 15% is $6,000. Your salary would have to be a lowly $30,000 for that to be a "20%" bonus.   In fact, the third year annual PC requirement is $190,000 (not cumulative and for the middle salary earners). $190,000 X 15% = $28,500.  That is nowhere near 100% of your salary and certainly won't put anyone over six figures.

Of the rare group of successful PMDs that weren't brought in by their fathers, I doubt any of them are over six figures in the fourth year.  

The whole idea is that they want to "smooth" your earnings so you are not sinking and soaring from month to month.  So while they will prop you up while you are starting, they are also not going to allow you to stick your hand in the cookie jar if you have some anomaly month in which you produce like a madman.  

To make up for the lost salary in the fourth year, a PMD will need at least an extra $100,000 in PCs ($100,000 X 38%) to keep their income steady.  In fact, most PMD's see their income drop in the fourth year.

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My responses nested below in bold:

[quote=FADavo]

I think the quarterly bonus is 15% of your cumulative production.  If it wasn't then no one would stay in the PMD past 12-15 months.  Think about it.  Why would you stay in if you can produce 10K a month after 15 months and make more money.  10K is about what you would have to be doing (more like 15 by LOS 14).  at a 42% grid payout, thats 4200 or 6300.  You would just graduate out or take the grid pay instead.  

The 15% quarterly bonus is not based on cumulative production.  It is based only on the PC's generated during the quarter (either new PC's or recurring revenue).  We'll use your hypothesis and for simplicity, look at one month's pay.  At $10k PC's, the quarterly bonus for the month is $1500. Add your base salary for the month, say $5000. Total pay for that month in the PMD  program is now equal to $6500.  Recalculate on the FA grid and you have to factor in what the recurring revenue is and the chance that your transactional PCs are lower than the $10k.  In the early LOS, it's almost impossible  that a PMD can overcome the salary bump. However, if a PMD is consistly overshooting their  hurdles and the FA grid is higher, they will allow you to graduate early.  I know that happened for a Manhattan PMD.  However, it's unlikely because the PMD Monthly Incentive grid (47%) is already higher than most of the FA Grid.

Using your mistaken hypothesis again about cumulative PCs, let's say a PMD finishes LOS 24 at $250K and stops completely.  For every Quarterly Bonus=250K x 15% = $37.5k. So for the year it would be 4 x $37.5 = $150k! Plus his salary.  So this 3rd year PMD would be making close to $200K?  That is incorrect.

And if you are saying you 'can't" do as much, then your second statement that the pay of a 4 or 5 year person drops dramatically makes absolutely no sense.

You said it yourself that you have to be doing 190K in your third year (just the annual) to simply graduate.  Okay, so say you only MODESTLY grow the next year, at a level that they would consider unacceptable - 75K more, for a total of 265K in production.  Even at a low 38% payout and NO bonuses for production you still make over 100K.  So how could it be that the production in year three plus bonuses "certainly won't put anyone over six figures" but also that "income drops in the fourth year" when its not mathematically demonstrable that both could happen.  This two thoughts are diametrically opposed to each other.  

1. You are still working under the assumption that the hurdles can be done without splitting revenue with senior FA's or some other revenue sharing agreement.  You are correct that Year 4 will be higher if a PMD does it on their own and does not enter into any arrangements.  But as this forum and many PMDs have attested, it is virtually impossible to achieve the hurdles alone and I based my statements on that reality.

2. PMD 3rd year: Salary = $45k, Annual Revenue = $190k (based on the middle tier), Total Quarterly Bonus (correctly calculated based only on the annual revenue of $190K) = $28.5k.  Total income (again leaving out Monthly Incentives) for the 3rd year is $45k + $28.5k = $73.5K.  If the PMD gets to keep all his PCs (no help from anybody), then you are correct that the 4th year pay is higher.  But in real-life, we do not see that happening. 

To have a job at ML, you need to be doing 200K by year 3 to meet the hurdles.  At that pace, you are easily doing 275 year 4 which, even with no bonus %, is going to pay you out in excess of 6 figures.  So, either statement 1 or statement 2 is incorrect.  You are either capable of making 6 figures in year 3 which then could subsequently drop or you are not capable of making it in year three and statement 2 about "lower year 4 payout" is just not correct.    

Whether or not people "can" be successful at those numbers is not for debate.  My point is that if you want to work at ML, these are the numbers you will produce or you simply will not be there.  

I think you are missing the nuances of a successful PMD.  Your belief is that a PMD can go into the program, sit at a phone, and hit all the hurdles alone.  Yes, for the very rare and well connected PMD, that can happen.  Or if your Dad and Mom are Merrill FAs and are giving you their book.  But outside of that, the only PMDs that are making it through the hurdles are partnered.  And in the partnerships, the senior FA is not giving up their book or running semimars for free. 

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