Shearson Will Start Paying Trainee Brokers a Flat Salary

Shearson Lehman Bros. is changing the way it pays beginning brokers to eliminate pressure on them to sell securities to customers just to generate commissions, a company spokeswoman confirmed Friday.

Beginners will be paid a flat salary for the first 15 months, as well as a small bonus based on the total assets their clients invest, the official said. Most beginning brokers are now paid only commissions from the sale of stocks, bonds and other products, after nine months on the job.

Shearson, a unit of American Express Co., is the nation’s second-largest brokerage firm, with 8,800 brokers.

Industry critics have said that forcing inexperienced brokers with relatively few clients to survive on the commissions they earn provided a strong incentive for brokers to sell risky, inappropriate securities to investors. Shearson’s change comes at a time when the Securities and Exchange Commission, in response to a recent investigative series in The Times, is conducting a broad, informal inquiry into whether big Wall Street firms knowingly keep on brokers who cheat their customers.

But the Shearson spokeswoman said the change had nothing to do with the SEC inquiry.

She said plans to change Shearson’s training program began more than a year ago, although the change to a flat salary for trainee brokers was just announced.

She said the new policy “is consistent with the firm’s commitment to providing clients with the highest quality financial advice and products.”

Merrill Lynch & Co. began a similar program two years ago, guaranteeing new brokers a salary for the first two years on the job.

Shearson expects to complete training 1,900 new brokers by the end of next year. Their take-home pay will average $27,500, about a quarter of what the average experienced broker takes home in commission earnings, the spokeswoman said.