UBS UBS Group AG

Merrill Lynch will require its brokers to make at least two client referrals to other parts of parent Bank of America Corp. next year to avoid a cut in pay, a tweak to how the bank compensates its more than 14,000 brokers, people with knowledge of the matter said.

Merrill executives unveiled the changes to its brokers on Tuesday and said they would leave unchanged in 2017 the so-called pay grid, which accounts for the vast majority of a broker's compensation by paying them a percentage of the fees and commissions they generate.

Merrill brokers who fail to meet the referral quota to other parts of Bank of America—including its online brokerage platform Merrill Edge, its retail bank and other units—will see 1% shaved from their take-home pay or deferred compensation depending on how much they produce in fees and commissions, the people said.

Bank of America is making the change as rival Wells Fargo & Co. continues to deal with the fallout of aggressive cross-selling practices that led to the opening of as many as two million retail-banking accounts with fictitious or unauthorized information. Merrill, however, requires its brokers only to make a referral to another Bank of America unit, giving them credit regardless of whether it generates new business.

The change was welcomed by Merrill brokers who had seen more-severe modifications to how they are compensated in prior years, the people said. For 2016, Merrill increased certain grid thresholds that would have caused some Merrill brokers to lose 2% to 8% of their base pay unless they increased the fees and commissions they generated. Before that, Merrill cut how much brokers were paid on accounts with less than $250,000 in assets to encourage them to work with bigger clients.

Rival Morgan Stanley is making heavier changes to its broker compensation next year. The bank told brokers last week it will raise some compensation-grid thresholds it uses to pay brokers by about 10% to incentivize them to produce more revenue, as part of a broader effort to rein in costs and generate more revenue.

UBS Group AG introduced its pay changes for 2017 in June. The Swiss bank simplified its broker pay plan, increased cash payouts for teams that generate $1 million or more in fees and commissions and cut back the number of bonuses brokers can earn to focus on new assets gained and length of service.

Write to Michael Wursthorn at Michael.Wursthorn@wsj.com

(END) Dow Jones Newswires

December 07, 2016 10:45 ET (15:45 GMT)

UBS (NYSE:UBS)
Historical Stock Chart
From Mar 2024 to Apr 2024

UBS (NYSE:UBS)
Historical Stock Chart
From Apr 2023 to Apr 2024