Upon successful completion of the Merrill Lynch Financial Advisor training program, our experienced advisors will be transitioned from a salary and incentive compensation structure to full fee based compensation. As a guideline, new advisors in the training program will need to bring in a minimum of $10 million a year in fee-based assets under management with an average of 10 new households (client relationships) each year. Keep this in mind as you work through the following scenario.
Scenario: By way of example, let’s assume that Financial Advisors charge on average 100 basis points (bps) or 1% for advice on fee-based assets under management and the approximate payout is 40% to you, the advisor. Using this information as a starting point, address the following questions: 1. Assuming you charge an average of 1% for advice on your fee-based assets undermanagement, how do you plan to replace your salary structure upon graduation from thetraining program? What level of assets under management would that require for you upon completion of the program?