UBS Wealth Management Americas made waves last year with layoffs of about 650 advisors who were generally producing less than $250,000 annually. Also last year, UBS sold 55 low producing branch offices, with roughly 320 financial advisors, to Stifel Financial Corp.

It came as a shock to the industry, given that advisors are paid only on commission, rather than a fixed salary. With Merrill Lynch now following suit, it raises the likelihood others will, too.

"The big issue here is that Merrill and other wirehouses are embracing high production brokers and shunning lower ones," Dannemiller said. But if smaller and independent brokerages can find a model in which lower producers are profitable, the wirehouses ought to be able to also, he said, so as not to lose those assets.

Merrill Lynch could be hopeful that its new online and call-center-based brokerage, Merrill Edge, will allow it to retain the client assets of brokers they let go. Merrill Edge channels "mass affluent" clients with less than $250,000 in assets, and it's a more cost-effective set-up than having full-service advisors.

The firm could simply be clearing desks for more promising trainees too, Dannemiller said. Merrill hired 1,600 rookies this year.

Merrill Lynch hasn't announced its 2011 advisor compensation plan yet, but people familiar with it say it will include some additions to its Strategic Premium Award program. This part cash, part deferred compensation bonus is based on the percentage of advisors' client households--and acquisition of new households--that have more than $250,000 in assets. In 2011, there will be more ways to qualify for the bonus, such as by selling insurance and other fee-based business.

UBS Wealth Management Americas, which announced its 2011 compensation plan last week, employed a similar strategy, expanding the awards for non-traditional business that brings recurring revenue to the firm.

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