2001 Compensation Survey

It was great being a broker in 2000 - provided you already were a big producer, had converted most or all of your business to fees, and had been with your firm for some time (or successfully switched firms for a big up-front payment).

If that doesn't describe you, the picture was a bit less rosy. And it may continue to be less than terrific this year, too. Aside from the market's less than stellar performance, firms are continuing to demand that brokers gather more assets and produce more overall. In short, firms are willing to pay top producers handsomely - including lavish deferred compensation plans, bonuses and stock options. But if you're not in the big leagues, you better figure out a way to get there fast or look for a position on the farm team.

Several firms, including Morgan Stanley Dean Witter, have raised the minimum ticket size on which they'll pay commissions. Others, including Salomon Smith Barney, have cut their grid, so that smaller producers earn less. Merrill Lynch, of course, has raised its commissionable account size from $20,000 to $100,000.

Highlights of compensation at several major firms follows.

Dain Rauscher

About nine months into a new broker compensation scheme Dain Rauscher introduced last year, the Minneapolis-based firm was acquired by the Royal Bank of Canada. Rather than change the grid for 2001, spokesman Kevin Cockett says the firm will leave things as they are for the time being.

Last year's adjustments included an annual cash Growth Bonus paid to brokers for increasing productivity year-over-year. Among the criteria to qualify, brokers must:

• Meet a $150,000 minimum production level, which increases by $50,000 with each year of service through year six, when $300,000 becomes the minimum.
• Have worked for the firm for two years.
• Have increased their annual production by at least 10 percent.
• Have increased their assets under management at Dain by at least 10 percent.

The size of their Growth Bonus depends on the production increase. Those with increases of 10-15 percent, received a bonus equal to 1 percent of gross production. A 15-20 percent increase yields a 1.5 percent bonus. A production increase of 20 percent or more earns a 2 percent bonus.

Gross Production	Payout
$0-$150,000	20%
150,000-174,999	25%
175,000-199,999	28%
200,000-224,999	33%
225,000-249,999	36%
250,000-299,999	38%
300,000-349,000	40%
350,000-399,999	41%
400,000-499,999	42%
500,000-599,999	43%
600,000-799,999	44%
800,000-999,999	45%
1,000,000-1,249,000	45%
1,240,000-1,499,999	45%
1,500,000-up	45%
Brokers are paid 30 percent of annual fees charged to customers in the company's Investment Access asset-based accounts. Until the recent acquisition of the firm by Royal Bank of Canada, Dain Rauscher brokers received bonuses of company stock paid on production exceeding $300,000. A company spokesman said the stock bonus payments have been suspended until a new plan is put into place. Source: Internal Dain documents, confirmed by firm

(cont.)