By Jed Horowitz
NEW YORK (Reuters) - Merrill Lynch is dangling a new incentive in front of its brokers by creating a "recognition club" for those who bring in $8 million or more a year from clients, more than doubling the top goals set by its securities industry rivals.
Until now, Merrill Lynch Wealth Management's top recognition club was its "Circle of Champions" for financial advisers who produced $4 million of commissions and fees, or received 2.5 million of "production credits" for sales of products and services that qualified them for the firm's top sales payout.
In a sign that the Bank of America Corp
The new "Pinnacle Club" will pay its members $10,000 in cash and additional benefits if they produce $8 million of revenue or build up 5 million of production credits.
Club membership also gives members bragging rights as elite brokers, the ability to advertise their status on their websites, and priority when accounts of departing brokers are redistributed or when customers are referred to the broker-dealer from other parts of Bank of America, according to a description of the recognition clubs in Merrill's 2014 compensation booklet.
Brokers who qualify for Pinnacle as well as for Merrill's seven lower-tier recognition clubs also can participate with their significant others in "Top Advisor Summits" that are usually held over several days in resort areas.
In reporting first-quarter earnings last week, Merrill said its 13,725 brokers were on target to produce an average of $1.06 million each this year, one of the highest averages in the brokerage industry. The average is skewed, however, by heavy hitters who could qualify for the new club. Fewer than 5,200 of its advisers had $1 million or more of production in 2013.
A Merrill spokeswoman declined to comment about the new club.
Spokespeople at competitors such as Morgan Stanley
Brokerage firms are sensitive about discussing sales incentives as the U.S. Securities and Exchange Commission considers imposing a higher standard of customer care on their sales practices and the Financial Industry Regulatory Authority is warning the firms to vet potential hires more carefully.
Broker-dealers can sell any product considered "suitable" for a particular customer's net worth and risk appetite, even if they choose one that is more lucrative to the firm or adviser. Investment advisers who directly manage money are held to a higher standard that requires them to put their customers' interests ahead of their own.
The Dodd-Frank financial reform bill directs the SEC to decide whether to conduct studies on the care standards and decide whether to unify them.
Merrill's compensation guide notes that advisers who have received internal admonishments or were subject to action by any U.S. securities regulator cannot participate in a recognition club for the year these occurred.
(Reporting by Jed Horowitz; Editing by Lisa Von Ahn)