Bank of America Corp.'s Merrill Lynch is taking a new, tougher approach toward its advisers who fail to build up enough business over the years.
Like other big brokerages, Merrill Lynch traditionally discouraged this class of brokers from staying with the company by paying them less, using a "penalty box" on its pay grid. Those penalties have stiffened over the years, making it tougher for veteran advisers to coast at low levels.
But starting at the end of 2011, advisers with 10 or more years of experience, producing less than $250,000 in annual client commissions and fees will be pulled from the adviser ranks, according to people at the firm. This is the first time Merrill Lynch has adopted a flat production minimum.
Advisers who fall below the cut-off point will have the option of being considered for other, lower-ranked jobs at the company, such as client associates. Merrill Lynch had 15,340 financial advisers, with an average annualized production of $841,000, at the end of the third quarter. It is not clear how many fall below the new production minimum.
