Merrill's Long March for Native American Business

Forty years ago, an enterprising branch manager brought in Merrill's first tribal assets. Today Merrill's tribal unit is headed by one of their own. How one account came to shepherd $4.5 billion

Today, nearly two decades after Congress passed the Indian Gaming Regulatory Act, it's obvious why Wall Street's multicultural-marketing efforts include Native Americans. The gambling casinos permitted under that law have produced a $10 billion industry, creating new jobs in Native American communities, new assets and demand for all sorts of investment products.

But Merrill Lynch can claim that it was way ahead of this trend as the first retail brokerage to cater to the Native American market. It all began back in 1964 — a time when the nation was just coming to grips with the plight of blacks and the issues of a smaller, less visible ethnic minority were not on the radar. Still, the ears of an enterprising branch manager from Buffalo pricked up when he heard that the Seneca Nation was looking for someone to manage its assets. The BOM — William Schreyer — won the business and went on to become CEO of Merrill between 1987 and 1993.

Merrill's Multicultural Roots

The Seneca account began a relationship that has continued and blossomed: Today Merrill manages $4.5 billion in assets for 50 tribes. And, in 2004, it established an Indian Business Development Unit, the latest in a string of multicultural-marketing groups aimed at Hispanics, African-Americans, gay/lesbians, et al. The group is headed by Dawson Her Many Horses, a member of South Dakota's Rosebud Sioux Tribe, who previously worked in Merrill's Public Policy Group. Across Merrill's Private Client Group, more than 150 financial advisors have now been specially trained for the Native American market; roughly 20 percent of them are Native American.

While Merrill's work with Native Americans grew steadily over the decades, Jyoti Chopra, head of Merrill's Multicultural Marketing Group, credits the new marketing group with really building the business up. “It was with Dawson and the Indian Business Development Unit that we began actively marketing to the community, galvanizing our efforts to create a comprehensive business and marketing plan.”

Since the unit was formed in 2004, Merrill has provided customized training for reps who call on the Native American accounts. “We also give them hands-on field education,” says Chopra. “We take them around and educate them on the needs of the Native American market.”

Her Many Horses says, “Native Americans are looking for firms that understand their unique needs and history. But, I tell FAs that working with them successfully is also a matter of just using common sense.”

So, what exactly are those needs? “We work primarily with tribal governments and tribally owned enterprises like casinos, hotels, construction companies, transportation companies,” he says. “They want help with retirement, 401(k)s, deferred compensation and setting up trust funds for tribal members,” says Her Many Horses.

Gaming upped the ante. “With the advent of gaming in the late 1980s, which really took off by the mid-90s, they typically have a great deal of assets to manage. So, we help them set up endowments,” Chopra says. Account sizes range from “several million dollars to several hundred million.”

A major theme for these clients is diversification — they don't want to rely only on gaming, he says, and now find themselves at the helm of everything from restaurants to real estate firms. “They're looking at least 100 years ahead to try and secure the tribe's future,” says Chopra

Doing business with Native American tribes requires time and patience. “They have an inherent distrust of large institutions,” says Her Many Horses. “Despite their mounting assets, they aren't all financially literate and are quite fearful of being taken advantage of. You have to earn their trust, and that takes time.”

Also, these “aren't your typical retail accounts,” he says. “Tribes have governments, and recognizing their sovereignty is an important part of approaching them.” Decisions are not made by individuals, but by tribal councils, which may number from five to 10 people or more.”

A further complication: Tribes typically change governments every two to four years. Thus, an advisor for one administration will likely have to prove himself all over again to the next.

Tribal Trust

One Merrill team that focuses on Native Americans is based in its Wayzata, Minn., branch, about 10 miles west of Minneapolis. There, Peter Eckerline and Barbara Bensini lead a seven-member team. “Native Americans receive short-term government funds,” says Bensini, who had worked with Indians for 15 years before joining Eckerline eight years ago. “Back then, we knew that the 3,700 members of the Mille Lacs Band of Ojibwe were investing with a bank. A former partner and I showed them how Merrill could get them better rates of return. We became friends with the chief and subsequent chiefs. Their assets grew because of all their investments. We forged a really strong relationship with this group,” she says.

When Bensini came aboard in 1998, the tribe was building a casino. “We got in on the ground floor. As they got more and more funds, we helped them invest,” Eckerline says. “They became interested in 401(k) plans. Now, we manage them for the whole band. They've also set up funds for health insurance and pension plans.”

In 2001, the team garnered an account with the 3,000-member Little Traverse Bay Bands of Odawa in Michigan — via referral. They're currently in talks with two other area tribes. “If you do a good job in Indian country, word gets around,” Eckerline says.

Since Eckerline was doing so well with Native American clients before the Indian Business Development Unit was created, does he see any benefit in the corporate marketing effort? “They've been a great asset to us,” Eckerline says. “They arranged for us to bring some tribal leaders to New York to meet with Dawson Her Many Horses and other Merrill executives. We took them to the NYSE for the opening-bell ceremony. They also arranged a private tour of the Americana Indian Museum for them. Things like this are invaluable.”

Back home, Eckerline and Bensini say they are reaping more than financial rewards. Their investment plans have helped the tribes fund health insurance, housing and schools for their members, says Bensini. “They're also dealing with sewer and water issues, and trying to fight drug use,” she says. “Each time we visit, we see more and more progress being made.”

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