Merrill Lynch has introduced a new "trust wrap account" for its reps and has made an adjustment on its trust management account compensation schedule.
The new trust management account (TMA) compensation formula credits reps with 50% to 75% of the trustee fee. Merrill brokers will get production credits equal to 90% of the trustee fee for accounts opened in 1996 and 1997. Prior to this year when the changes went into effect, reps got gross credits of 100% of all managed trust account fees.
Both the changes in the TMA fee schedule and the new trust wrap accounts are attempts by Merrill to keep more revenue in-house, says one Merrill executive. The introduction of the trust wrap was prompted by Merrill Lynch Asset Management (MLAM) says the executive. He says that the group is seeking to keep more assets at the firm rather than see assets move to outside managers or trustees.
The new trust wrap account does not involve the firm's traditional wrap account division, Consults, the executive says. He says MLAM, which offers a mutual fund wrap account service, is looking to harness more wrap assets through a closer affiliation with the Merrill Lynch trust division.
Another Merrill executive says the new trust wrap account isn't being widely marketed throughout the firm.
The firm's compensation schedule notes that the trust wrap account has the same features as the TMA, but will be inclusive of transaction costs. Reps get production credits of 65% of the fees for these accounts, according to the schedule. The fee on the first million dollars of assets under management is 1.75%, sliding to 60 basis points on accounts of $10 million or more. The minimum account size is $500,000.