Bank of America Corp., the second- biggest U.S. lender, boosted bonuses for Merrill Lynch financial advisers who steer clients to use more of the bank’s products.
Advisers who increase the flow of funds by at least 10 percent will be eligible for so-called strategic-growth awards starting next year, John Thiel, head of U.S. wealth management, and John Hogarty, chief operating officer of the unit, said yesterday in a presentation. An increase of at least $5 million to $25 million in funds -- including deposits, investment services, bank loans, mutual-funds and alternative investments - - is needed to qualify for the program, Hogarty said.
“We’re creating significant opportunity for advisers aligned to the strategy and focused on growing their practices,” Hogarty said during the presentation.
Morgan Stanley (MS), the brokerage with the most financial advisers, joined an industry push to boost the cross-selling of lending products last week when it disclosed a change in its wealth-management compensation plan. Bank of America, which purchased Merrill Lynch in 2009, has sought to improve profit without angering its brokerage corps by crimping compensation.
The first $10 million in funds growth at Merrill Lynch triggers a bonus worth 5 basis points, or 0.05 percent of that sum, Hogarty said. That swells to 10 basis points for $10 million to $50 million in new funds. Anything exceeding $50 million earns 3 basis points.
Bank of America previously had offered a so-called asset- gathering bonus tied to total new funds that was capped at $50 million. The Charlotte, North-Carolina-based firm won’t change brokers’ so-called grid payout, usually the largest portion of compensation, Hogarty said.
The lender also boosted the cash payout for retiring financial advisers to 100 percent to 160 percent of their annual production over four years, up from 70 percent to 80 percent, he said. Merrill Lynch offers the awards to retiring advisers in an effort to retain their clients.
Reuters reported on parts of the plan yesterday.