Last year, Bank of America was in some serious need of new business. Didn’t matter what kind of business or where it came from. Just get some new customers. Or old customers doing new things. Whatever.
That latter bit was where Merrill Lynch’s army of brokers came in. They, are, after all, in contact with millions of Bank of America customers every day. Maybe they could just slip in a good word for the BofA bankers across the hall, or urge a little D.I.Y. trading on Merrill Edge, the bank’s online brokerage. The only problem was coming up with a system to encourage such things that was not also a massive conflict-of-interest generator. Brian Moynihan & co. opted for penalizing, rather than rewarding: Refer at least two customers to some other BofA business in 2017? You get your full salary. Don’t, and your salary just became 1% less.
In honor of the first anniversary of the election of President What’s A Conflict of Interest, BofA’s giving up the pretense: Make a couple of referrals next year—along with a couple of other business-boosting moves—and you get a 2% raise. Don’t, and you don’t. Simple.
“The focus on referrals is strengthening over time,” said a person familiar with the matter…. Still, regardless of referrals, Merrill brokers who fail to meet minimum growth targets -- at least 2.5% growth in net new assets and liabilities and three affluent household clients or one ultrahigh-net-worth household -- will see their pay fall by up to 2%....
“The market opportunity is huge,” head of Merrill Lynch Wealth Management Andy Sieg said in a memorandum announcing the 2018 pay changes to the firm’s force of about 15,000 brokers. While the firm has been investing in digital capabilities, advertising and upgraded products and services, “one last missing piece is compensation,” he said, calling the design of the new plan meant “to align incentives with growth behaviors.”