After vastly simplifying it’s payout structure earlier this year, Wachovia Securities announced in a memo to brokers Tuesday that it would make some more tweaks in 2006 and raise ticket charges on some in-house money-management products to match those of third-party products.
While top producers said little would change for them under the new payout grid, some lower-end brokers were peeved. Next year, brokers will get 20 percent on their first $9,500 in production per month, up from $9,000 this year, and 50 percent on everything after that, said brokers. Wachovia also promised a minimum annual payout of 27 percent for brokers that generate revenue of $100,000 to $250,000, and 30 percent for those producing over $250,000.
“The total potential negative effect on me is $1,200,” says one Wachovia broker, who produces around $1.5 million a year. “Which in my mind is a complete snooze. To make that up I have to make one extra call a month,” he says.
Wachovia declined to comment.
Another broker, who declined to disclose his annual production, says, “They’re screwing everyone on their first dollars of gross.” He adds, “They tried to explain it as a business person dealing with inflation. They are currently keeping 80 percent of every broker's first $9,000 and it seems like there is plenty to cover inflation.”
In any case, Wachovia brokers seem to be happier with their payout this year than last. In Registered Rep.’s annual Broker Report Card survey, which is featured in the December issue (and will be arriving on your desks within days), Wachovia brokers gave their firm a score of 7.8 on payout, up from 6.5 last year.
Wachovia also will begin levying ticket charges on its in-house Compass separately managed account program so they are equal to those paid on outside separately managed account programs. “Brokers were basically getting paid more to use the in-house stuff,” says one big broker. “There’s very few brokers who use Compass, but they could take a big hit in the first year, so [Wachovia’s] making up the difference with deferred comp.”
