Merrill announces laser-targed advisor bonus incentives for 2027

• Key insight: As wirehouses seek to retain and recruit advisors, Merrill becomes the latest firm to avoid rocking the boat by making only minor changes to its pay policies in 2027.
• Supporting data: Among the tweaks, Merrill is raising the minimum strategic asset requirement to qualify for its Growth Award from $5 million to $7.5 million.
• Expert quote:  "You know, if you're flat, nothing's really changing. It's just people on the margin, maybe, that potentially could lose out."— Andrew Tasnady, founder of Tasnady & Associates

For the second straight year, Merrill is tweaking its compensation policies to encourage advisors to bring in more client assets and offer banking products, while leaving basic compensation unchanged.

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The Bank of America subsidiary announced its advisor compensation strategy for 2027 on Thursday. The changes include revisions to its Merrill Growth Award policies designed to reward advisors for bringing in new assets and client households and a new award to encourage lending to clients. At the same time, Merrill is planning no changes next year to the basic grid determining how much advisors get to take home when they generate certain amounts of revenue annually.

"We look at compensation every year to make sure it supports our long-term strategy and rewards advisors for strong performance," Merrill Chief Operating Officer Patricio Diaz said in a statement. "This year, that meant making a few targeted updates that reflect the evolving needs of our clients and the breadth of capabilities our advisors bring to them."

READ MORE: What to expect in advisor pay in 2026

With advisor pay, consistency can be best

While wealth managers often use pay policies to nudge advisors toward arranging loans for clients and similar actions, most are reluctant to make big changes from year to year. Survey results released this month by the research firm Cerulli Associates suggested that advisors looking to join new firms value pay policies that are not only generous but also consistent.

Andrew Tasnady, a compensation consultant and the founder of Tasnady & Associates, said Merrill's changes for 2027 are largely neutral. They're likely to be welcome to advisors whose business is growing but could go unnoticed by others.

"You know, if you're flat, nothing's really changing," Tasnady said. "It's just people on the margin, maybe, that potentially could lose out. But it's probably not that many people."

Merrill is the third of the so-called wirehouses to announce its pay policies for 2027. Of the two others, UBS is making no changes to its basic pay grid, while Morgan Stanley is adjusting its grid so that advisors will need to produce more revenue in order to have the same take-home pay next year. The fourth wirehouse, Wells Fargo, usually announces its compensation policies this month.

With no changes to its basic grid, Merrill will most likely maintain its place in the middle of the wirehouse pack for advisors at various revenue-production levels. Merrill advisors who generate $1 million in revenue credits a year now get to keep $465,000 — more than their peers at Morgan Stanley but less than those at Wells Fargo and UBS. At the $2 million production level, Merrill advisors keep just over $1 million, which is also less than is paid at Wells and UBS but more than at Morgan Stanley. 

READ MORE: Merrill boasts of 75% graduation rate for its advisor training program 

Merrill Growth Award changes, New Lending Growth Award

Basic advisor pay is usually augmented by awards and bonuses meant to encourage advisors to pursue certain types of business. Merrill's compensation adjustments next year are solely to these sorts of incentives.

The firm is changing some of the qualification criteria for its Merrill Growth Award. The policy pays qualifying advisors an award equal to 12 basis points (0.12%) of up to $50 million on what the firm calls "strategic flows" — such as money in managed accounts, banking deposits and lending arrangements. The payout percentage falls for flows in excess of $50 million.

Advisors qualify for the award by hitting a minimum amount of assets or a minimum number of client households; both criteria will increase next year. 

Starting in 2027, advisors will have to bring in a minimum of $7.5 million in strategic flows, up from $5 million, or obtain four new household credits, up from three. (Merrill generally provides one "credit" for each new household but may allot more for large households.)

Separately, Merrill is eliminating its current "elite award" for advisors who bring in more than $150 million in strategic flows and replacing it with three new elite awards. Those new awards will be given to advisors who either bring in $50 million or more in net inflows into managed accounts or $10 million or more into checking or savings accounts, or help arrange $10 million or more in total loans to clients. Advisors who qualify for the elite awards receive a 50% higher addition to their standard Merrill Growth Award payout.

Merrill is also introducing the New Lending Growth Award, an incentive that will pay 10 basis points (.10%) on $10 million or more in total loans arranged for clients and 20 basis points on $25 million or more in loans.

Tasnady said firms will occasionally adjust rewards to remind advisors what their priorities should be.

"A lot of times with bonuses, you have to make a tweak just to keep people's attention on them," he said. "People get used to whatever the compensation is. So it just is like a slight energy jolt just to refocus or continue to try to focus as much attention as possible on those key drivers."

READ MORE: Merrill underlines recruiting ambitions with $2.2B advisor pulled from JPMorgan 

Recent pay changes, revival in recruiting

Merrill's efforts to encourage advisors to bring in new assets and households and arrange loans have also borne fruit. Merrill Wealth Management saw its total client balances — which includes investments, deposits and loans — rise by 9% year over year in the third quarter to $4.2 trillion. Merrill also reported adding 4,200 households net with $500,000 or more investable assets, a figure up 17% year over year.

Merrill started paying its growth awards in 2024, the same year it abandoned an unpopular growth grid that offered advisors more of a mix of rewards and punitive measures for attaining or failing to attain certain goals. Since then, the firm has mostly avoided big changes to its pay policies and instead stuck to adjustments around the edges.

This year, for instance, Merrill lowered its payouts for advisors who work with "small" households — those with between $250,000 and $500,000 in assets and loans. Advisors now receive a cut equal to only 20% of the revenue credits they generate from these clients. 

Merrill and Bank of America have meanwhile recommitted to recruiting advisors. In a call discussing the firm's earnings last week, Merrill Wealth Management co-head Lindsay Hans said the firm so far this year has more than doubled assets brought in through recruited advisors.

"As we look ahead, we've got continued momentum," Hans said. "October is really shaping up to be the strongest start to the fourth quarter since we relaunched experienced advisor recruiting in 2024, and we have a number of contracts in place. At the same time, we continue to maintain strong experience advisor retention, and that reflects the access to the Bank of America and Merrill platform to be able to serve clients and again support them at every stage of their careers."