The retention package, announced to advisers Friday as an incentive to stay with Bank of America Corp., applies to retirement plan advisers the same way as wealth management advisers at the firm by rewarding the highest-producing advisers (see Bank of America Buys Merrill Lynch, Bank of America Fills Out Leadership Team). Advisers say it not yet been made clear how the retention package will affect the retirement plan business specifically.
The retention package is as follows, according to published reports:
- Advisers who produce $1.75 million in fees and commissions will receive 100% of their last year’s book of business (as of September 15): 75% of their bonus in a seven-year forgivable loan, and another 25% in deferred cash over three years.
- Advisers who produce $1 million to $1.749 million in fees and commissions will receive a seven-year forgivable loan equal to 75% of their last year’s book of business, and can receive up to a 25% growth reward, payable over four years.
- Advisers who produce $750,000 to $999,999 will receive a 50% seven-year forgivable loan and can receive up to a 25% growth reward.
- Advisers who produce $500,000 to $749,000 will receive a 25% seven-year forgivable loan and can receive up to a 25% growth reward.
- Advisers who produce less than $500,000 will receive get a 20% deferred cash payment.
A Merrill Lynch retirement plan adviser in Texas told PLANADVISER.com this is a good plan that rewards top producers well. However, the plan risks losing some solid up-and-comers at the firm—for example, some advisers that have been at the firm five to 10 years, starting from scratch and building up an impressive book, even if it might not quite reach the million-dollar mark. “I wouldn’t expect a colleague of mine to stay for 20% of half a million dollars if he’s getting an offer for a million dollars to go across the street,’ he said. Merrill Lynch could be shutting out of the future big moneymakers for the firm, while keeping around older advisers who were in the process of transitioning their books anyway. “I’m afraid that they are going to lose a lot of the future superstars at Merrill,’ the adviser said.
The plan does, however, get rid of some of the dead weight at the firm, he continued. “It will do a good job because there are a lot of people that you need to get rid of at Merrill that…should be making a million [dollars] but they don’t,’ he said.
A Merrill Lynch retirement plan adviser in the Midwest agreed that it rewards the most successful advisers appropriately. “The ones who are successful and who are doing a good job will be rewarded handsomely; those who have not been successful will receive very little or nothing,’ he said. Overall, he said he feels positive about getting an extra reward when he wasn’t looking to move. “If you aren’t getting anything, you probably aren’t doing that well in the first place,’ he said. “If you don’t like it, you can leave.’
Merrill Lynch did not return immediate requests for a statement.