US brokerages add cross-sell sweeteners for advisers

US brokerage firms are increasing incentives for their financial advisers to sell more loans and banking products to their clients. Banking giants including Bank of America Corp and Wells Fargo & Co have touted the potential cross-selling gold mine that their retail brokerage arms represent, but many advisers have been reluctant to play ball.
"That's how it is. Unless you put money on the line, no broker is interested in doing something new," said Alois Pirker, research director at Aite Group. The attractions for firms are easy to see - the more products and services that a client has with one firm, the more difficult it is for them to leave, even if their adviser decides to switch firms.
Banking products are also big revenue producers for firms. They have hundreds of thousands of potential new customers who already have a relationship with their firm and so, the thinking goes, do not need the same level of persuasion to become a banking customer.
Firms also do not have to pay as high a commission to advisers for selling those products compared to other investments. Unsurprisingly, advisers have not traditionally viewed cross-selling in the same way.
Besides the lower compensation, advisers have often been left to clean up the mess if the banking side let a client down or even refused them for a loan, said Andrew Tasnady, a compensation consultant who helps to design pay plans for brokerage firms.
To overcome this reluctance, brokerage firms have introduced new bonuses for cross-selling. "This is an ongoing trend," said Tasnady. "Firms continue to add more targeted, behaviour-based bonuses."
This year, Wells Fargo Advisors added a new bonus for advisers who sell at least three banking products or services. An adviser can earn between 0.5 percent and 1.5 percent of yearly gross revenue, depending on the revenue they generate.
Meanwhile, Bank of America is maintaining a bonus it introduced last year that rewards Merrill Lynch advisers whose clients open savings or checking accounts.
Advisers are given a "Strategic Premium Award" for increasing the number of their clients with at least $100,000 in investable assets who open bank accounts. Previously advisers could only earn that bonus by increasing their number of clients who had at least $250,000 in investable assets.