Merrill's Destruction
Interesting read as posted at “Here is the City”
There has been a lot of noise recently about a January lunch between
Bank of America CEO Ken Lewis, and former Merrill Lynch executives Dan
Tully (ex-CEO), Launny Steffens (ex-head of private clients), and
Winthrop Smith (the son of one of Merrill’s founders).
abound that the three ex-Merrill men explored the possibility of buying
Merrill back from Bank of America, and restoring the firm to former
glories. But Lewis, it seems, was having none of it, as he remains
committed to the acquisition. And Smith recently told Reuters that,
although a number of Merrill employees would like to see the firm
regain its independence, ‘I don’t see that as a reality’.
But another former Merrill executive, Bob Marrone, has written to Here Is The City expressing his views and hopes for the future of the firm. Here’s what he said:
‘As
a former Merrill Lynch executive and currently a radio talk show host,
I have been able to comment publicly on the demise of this once great
company. In addition, I have had the privilege of interviewing Win
Smith just prior to the now-famous speech he made at Merrill’s
last-ever shareholder meeting. Smith’s speech was, in some ways, a
therapy for the hurt that I, and many other current and former Merrill
employees, have endured while watching the spectacle of abjectly
selfish, mean spirited and arrogant people destroy what we, and those
before us, spent a lifetime building.
Now let me talk a bit
about the three former Merrill executives who are thought to have put
in a bid to buy-back Merrill from the clutches of Bank of America; Dan
Tully, the tough street kid who worked his way up to become CEO, Launny
Steffens, for whom I worked early in my career and Winthrop Smith,
whose name was effectively on the door, are men of integrity. They
fostered a culture of client focus and putting no individual business
unit’s bottom line ahead of the larger goals of the company’s
reputation and well being. Concepts such as ‘bringing Wall Street to
Main Street’ and ‘the customer’s interest must come first’ were not
merely introduced by the marketing department to mask other ambitions,
they were a creed, something routed deep in our belief system. It’s sad
to see how this all changed by those that came after them.
These
three men are at a time in their lives when they can enjoy retirement
in unimaginable comfort. Instead, they are now thought willing to
breathe life back into ‘Mother Merrill’. For these gentlemen, it was
never about getting rich - it was about being successful while, at the
same time, protecting the legacy and reputation of a very special
franchise. I was always proud of where I worked, and of these three
individuals when I worked for them. Not too many of my successors could
say the same.
So, if these three men ever make a play for
Merrill, I would want to be there with them. And I am sure that many
more would follow. In any case, I will continue to call on the US
government to investigate the fall of Merrill Lynch. How was our
beloved firm allowed to take on so much risk that it threatened our
country, and destroyed our legacy ? What really happened at Merrill
Lynch ? We all have a right to know’.
Bob Marrone
hosts the Good Morning Westchester program on WVOX. He spent most of is
his career in the corporate sector specialization in training and
communications. Before coming to radio, Bob set up and ran training
schools and communications functions for such organizations as Merrill
Lynch, Thomson Financial and the Securities Industry Association, and
remains on the faculties of the Connecticut School of Broadcasting and
the New York Institute of Finance.
As a BAI guy I definitely will agree with you. If BAC tries to bully their business model and policies into MER than that institution is done. Talent will leave, FA’s will leave and BAC will be left with one huge write off.
In any case, I will continue to call on the US
government to investigate the fall of Merrill Lynch. How was our
beloved firm allowed to take on so much risk that it threatened our
country, and destroyed our legacy ? What really happened at Merrill
Lynch ? We all have a right to know’.
—
LOL. The U.S. government ALLOWED Merrill to blow itself up with highly leveraged mortgage bets.
Talent is leaving, cutacheck, as the bank IS imposing its ways. ML fell because of greed and arrogance at the top. Bob Marrone should change his name to Bob Moron.
I worked for both companies, they both sucked.
MER reps…just relax breath in…breath out…and BITE DOWN…there your microchip is safely inserted. Do not eat or drink for 24 hours to give the suppository time to implant into you digestive track.
You lost your biz when you passed on the opportunity to go indy. Your lump sum retirement payout was your fractional retention bonus. Now you are owned and will be pawned.I think this will just be a cycle, 5 years from now, BAC will spin off ML on it’s own again and reap the rewards of picking it up on the cheap. Talent will leave, but new talent will come in(from UBS, MSSB etc)because wires have always played that game…
I said this from the first announcement of the merger…Merrill will be spun off and BAC will make a killing. My guess is that a private equity firm/management takes them private. But there may not be sufficient capital for a private deal out there. So only time will tell. But I think BAC has a big, fat golden goose. And eventually, BAC will go back to their core business of banking and lending.
Really, you think someone is going to come along and pay more than 50 billion for Merrill ? If Lewis had waited another 2 months Merrill would have been another Wachovia.
No i think they IPO it.
[quote=B24]I said this from the first announcement of the merger…Merrill will be spun off and BAC will make a killing. My guess is that a private equity firm/management takes them private. But there may not be sufficient capital for a private deal out there. So only time will tell. But I think BAC has a big, fat golden goose. And eventually, BAC will go back to their core business of banking and lending.[/quote]
Whether sold or IPO’d, I don’t see a long term integration and synergy between BofA and ML. Both would be best off focusing on their core businesses. Anyone from SB knows the supposed commonalites that were to have made SB and Citi a great fit were never fully realized and in many cases, worked against each. Their core customers are soooo different. To think BofA and Merrill will complement each other more than that is niave. ML advisors today can bank on yet another massive set of changes within 2 -3 years in my opinon.
Agreed. The ONLY way mergers like this work is when the “acquirer” opts to keep the businesses completely independant, and does not mess with the “acquired” business. Citi/SB is the perfect example, as you said. Citi compeltey f’d it up by re-branding and other crap. The “economies of scale” don’t really exist, when the only overlap you can eliminate is senior management, since that just dilutes the brand and the effectiveness. Do you really think SB (pre-MS combination) or Merrill is stronger today? Hmmmm. Don’t think so. Just a couple of departments in a financial supermarket. Sure, some people buy their baseball gloves and power tools at Wal-Mart, but “real” buyers go to d***'s/Modell’s/Sports Authority/local shop and Home Depot/Lowe’s/local hardware specialty store. And I think there is a long-term shift away from the “financial superstore” mentality.
BofA and Merrill are like Jessica Simpson and Nick Lachey. Two good looking companies on their own but put together is just not going to be pretty. Merrill will break off in 3 years max.
Oh my...BofA and Merrill are like Jessica Simpson and Nick Lachey. Two good looking companies on their own but put together is just not going to be pretty. Merrill will break off in 3 years max.
bofa & merrill are like amy winehouse and her drug addidct boyfriend
Merrill is still the top dog on the street with the best brokers and platform in the business.
They'll break away from BofA in a few years and the rest will be history.Yes, Merrill was the powerhouse because of the platform and people. But the question is… a year or 2 from now, platform and all, how many of the people who made up the ‘herd’ will be grazing in another pasture? So many already are.
BAC will never spin anything off as long as Ken Lewis is there.
BAC will never spin anything off as long as Ken Lewis is there.
Not sure how long he will be there if this mess continues..
Dan Tully has been gone for 15 years at least. I know members of his family personally. Win Smith is know by many within the firm as a crybaby and a complainer and having been passed over multiple times for promotion to Chairman. Nepotism at it’s finest. Steffens has also been out for close to 6 or 7 years I believe…what are they gonna do?? I assume they all divested most of their shares years ago. Given their connections private money would be available.
Merrill blew themselves up. Plain and simple. 32 times leverage is a MFer. The gov't had nothing to do with ML's predicament and had it not been for their closed door marrying of ML to BOA then the firm would have more than likely gone the way of Bear or Lehman anyway. It was once a proud and somewhat noble company, but those days are long gone. They won't return sadly.32 x leverage
And they give financial advice Who in the world would listen to a company like that[quote=Greenbacks]32 x leverage
And they give financial advice Who in the world would listen to a company like that [/quote] Do any of your clients invest in zero-down real estate? I bet they do. So, in effect, you're calling your clients morons. How does that sit with you?And the side of ML that deals directly with retail investors (Global Wealth Management) had zero to do with any aspect of what “brought them down.”
They were trucking right along earning record profits while a hand full of folks were making some very bad decisions.Zero to do?
Weren't clients sold these bundled tranches via their ML FA? No offense, but ML was always rolling out new issues that paid more comission than safer secondary market alternatives. I understand not every FA was involved but many clients were hammered, as is the case at every major now.And I’ve sold a ton of American Funds to clients who were subsequently hammered in the meltdown. That’s not going to bring down Jones, though.
Touche, but those A-shares are marketable. Many client who owned these CDOs etc couldn’t divest them at all…if they were worth anything. I agree equity declines aren’t going to bring down Jones or any other firm. Your point about these decisions being made be a few people is spot on, and it happened in the investment bank.
I don't blame the advisors, anymore than I would for equity declines...but they do have some responsibilty as to what they invest their clients money in...especially if it isn't transparent. Crap shoot. That's not what we get paid to do... Remeber when ML decided to become a growth shop 9 years too late. ML Focus 20 anyone. Certainly, all firm have made mistakes. Obviously.But Jones didn’t put the American Funds portfolios together, leverage them to the hilt, then sell them to their own clients.
You're missing the point, which is that Merrill did this to themselves. THEY created the leveraged assets that THEY sold to THEIR clients. In your American Funds example the company who created the product is different than the company that sold the product. Thus one of the reasons EDJ doesn't do their own mutual funds and why companies like Merrill got out of the fund business years ago. When you create the products that you sell, you're basically on the hook twice. Once because you've got to turn a profit on those assets, and two your advisors sell them to clients who may take you to arbitration someday.It is one thing if people go out and buy some piece of crap on there own and another if you have someone who is advising you to do it!
Most professionals would not give such poor advice.I have been a rep for over 12 years and never sold a CDO. I was never comfortable with them. When I was going through my CFP classes, the instructor tried to explain them and it was very confusing to the whole class. Therefore, I stayed away. <?: prefix = o ns = "urn:schemas-microsoft-com:office:office" />
I have never worked at a wirehouse so I never had to sell the garbage they where pushing.
I have ACATed some in over the years.
Congratulations. You seem like an honest young lady.
[quote=Greenbacks] It is one thing if people go out and buy some piece of crap on there own and another if you have someone who is advising you to do it!
Most professionals would not give such poor advice.
<P =Msonormal style=“MARGIN: 0in 1.5pt 0.75pt”>I have been a rep for over 12 years and never sold a CDO. I was never comfortable with them. When I was going through my CFP classes, the instructor tried to explain them and it was very confusing to the whole class. Therefore, I stayed away. <?: prefix = o ns = “urn:schemas-microsoft-com:office:office” /><o:p></o:p>
<P =Msonormal style=“MARGIN: 0.75pt 1.5pt 0pt”> I have never worked at a wirehouse so I never had to sell the garbage they where pushing.
<P =Msonormal style=“MARGIN: 0.75pt 1.5pt 0pt”> I have ACATed some in over the years. <o:p></o:p><o:p> </o:p> [/quote]
We opened up a ML office in a small town in Sept. 07, leaving AG Edwards. Last fall we recruited over of the Smith Barney FA's and their office closed (minus 2 rookies). Our office is growing and our clients have come to us during all this crap. It is funny to hear people talk on the board about the destruction of the firm, when I am seeing, firsthand strong growth of a office and net new assets and annuitized assets flowing in. If you want to PM me to discuss, please feel free-but sometimes we think too much about this. Some of our competition thinks about it, while we keep bringing in the business. I am sure they are scratching their heads on this.
FYI, I started at EDJ, then AGE, now at ML after 19 years.I have been doing this for 23 years. During those years I have produced about 25-30 million in production. Sometimes on this blog there is an attitude that regionals or independents are BETTER than wirehouses. I believe each FA should select a work environment that let’s him or her best serve his/her clients effectivley. There are advantages and disadvantages to each channel.
I have never seen individual client sold a CDO, CLO or the old IO and PO products. I have seen clients sold GNMA and 1st traunch CMO products.
The problems at the firms that lost a lot of money was greed and lack of risk controls. That is why the CDO losses are at the firm level not the individual investor level.
The individual FA’s at ML did not create the issues that put ML under. Most of the FA’s that I have met at ML are honest, hard working and client focused.
I have been doing this for 23 years. During those years I have produced about 25-30 million in production. Sometimes on this blog there is an attitude that regionals or independents are BETTER than wirehouses. I believe each FA should select a work environment that let’s him or her best serve his/her clients effectivley. There are advantages and disadvantages to each channel.
I have never seen individual client sold a CDO, CLO or the old IO and PO products. I have seen clients sold GNMA and 1st traunch CMO products.
The problems at the firms that lost a lot of money was greed and lack of risk controls. That is why the CDO losses are at the firm level not the individual investor level.
The individual FA’s at ML did not create the issues that put ML under. Most of the FA’s that I have met at ML are honest, hard working and client focused.
Secretkowledge,
I believe that every FA has to choose a firm/model that is best for their clients and themselves. There is no such thing as "the absolutely right place to be" for all FAs. Not every FA will thrive and be comfortable in the same enviroment/model. I also agree that the firms that lost alot of money lost because of greed and lack of risk controls. I've also seen some FA's make bad choices. There are some FA's who really don't understand the business. I use to work with a FA who did sell CDO's to most of his clients. Sometimes he traded out of them, sometimes he rolled them....At any rate he concentrated too much of his business in that strategy. Surprising, he is still in the business. He recently went to Oppenheimer. I also currently work with some FA's who really don't do their due diligence when making recommendations to clients--a couple of them are now facing a few angry clients and complaints. I'm very sorry for the FA's at ML/SB. They ,as so many others, have been betrayed by the individuals at the firms who made decisions that resulted in unprecedented write-downs, bad will, etc., And even though these decisions were made at the firm level, it has affected everyone down the line. I know of some FAs who have had equity pulled out because of all the non-sense that has occurred in the past year--even though they didn't do anything improper with the client. Trust and reputation are everything in this business. There have been alot of changes in the past year, and I think there will be more. Let's just hope that with the changes that come are changes that will be beneficial to all----although I have been in this business a long time, and I have found that changes a firm makes usually primarily benefits the firm.[quote=rocky]
We opened up a ML office in a small town in Sept. 07, leaving AG Edwards. Last fall we recruited over of the Smith Barney FA's and their office closed (minus 2 rookies). Our office is growing and our clients have come to us during all this crap. It is funny to hear people talk on the board about the destruction of the firm, when I am seeing, firsthand strong growth of a office and net new assets and annuitized assets flowing in. If you want to PM me to discuss, please feel free-but sometimes we think too much about this. Some of our competition thinks about it, while we keep bringing in the business. I am sure they are scratching their heads on this.
FYI, I started at EDJ, then AGE, now at ML after 19 years.[/quote] You don't work at ML. ML doesn't exist. You work for BAC. You moved for a check I suppose. Just sayin' FWIW. Best wishes to you. 95% of your productivity has very little to do with where you are firmwise.[quote=Behavioral_FA][quote=rocky]
We opened up a ML office in a small town in Sept. 07, leaving AG Edwards. Last fall we recruited over of the Smith Barney FA's and their office closed (minus 2 rookies). Our office is growing and our clients have come to us during all this crap. It is funny to hear people talk on the board about the destruction of the firm, when I am seeing, firsthand strong growth of a office and net new assets and annuitized assets flowing in. If you want to PM me to discuss, please feel free-but sometimes we think too much about this. Some of our competition thinks about it, while we keep bringing in the business. I am sure they are scratching their heads on this.
FYI, I started at EDJ, then AGE, now at ML after 19 years.[/quote] You don't work at ML. ML doesn't exist. You work for BAC. You moved for a check I suppose. Just sayin' FWIW. Best wishes to you. 95% of your productivity has very little to do with where you are firmwise.[/quote] I did receive a check for moving and starting the office, but you can see I have been with EDJ and AGE that do not pay up front, so it was my first move where there was a transition package. I was the manager at AGE and I would have received a check as well for not only staying but trying to keep my FA's to stay with the new firm-Wachovia. Assuming I moved for a check would be like me assuming you are a low level producer who could not get offered a check, and I won't do that to you. So please do not do that to me. If you would like to know the reason for my move, you can PM me. Thanks for wishing me well, but my productivity and success has very little to do with well wishes.The only point I was making is the fact that you can do business anywhere...firm has little to do with it. It was actually in support of your NNA and NNUA claim. Although, I will say some firms do a better job of marketing to different investor market segments. I understand comp at both firms fairly well. They are about the same now if you are a top 25%er and LOS 5 plus...give or take a few bucks overall. Plenty to sell from both firms, and about the same investment menu. ML gets the nod on technology and HNW servicing though.
Although, you are a big winner on the BM comp. because the new WFC comp for BMs isn't what it once was...you probably already knew this though. ML as it once operated is done. I spent the better part of a decade there. There are tons of talented people all over that place. I have many friends that stayed and plenty that left. In the end, it won't really matter because they ALL will do well because they are pros. I am sure you will be successful along with your clients. If I seemd a little harsh...my apology if I offended you.Tiffany's and Wal-mart would never work.
To that end, BOA will most likely be BOA again, and ML will be absorbed up in pieces by Ameriprise.Funny you mentioned AMP. I’ve heard rumors about AMP raising another $B or 2 in capital to buy a ‘big’ name wire firm. It’s either UBS, a piece of UBS or ML. AMP has $7B in cash as of last week. They could pull it off and I don’t know another firm who could and would want to buy either. Very interesting at least. Call your local AMP FVP and he’s likely to say he or she think’s they’ll be ruling over mega ML teams soon. Funny cause it’s not funny at all. Can it happen? Yep! There are some freakin’ big players from the former HRBFS now reporting up to AMP dopes all over the place. When was that… late 08’???
If you do not mind me asking, how do you go about opening a office in small town. I am interested in moving from the mid west to my hometown but do not want to travel to NYC. Is it possible for me to open, and manage a new office for Merrill assuming I have all the qualifications?
I do not know your situation, but if you PM me with more information, I may be able to direct you to the proper people who could answer your question... Good LuckIf you do not mind me asking, how do you go about opening a office in small town. I am interested in moving from the mid west to my hometown but do not want to travel to NYC. Is it possible for me to open, and manage a new office for Merrill assuming I have all the qualifications?
I only mentioned AMP because that is the way they do things there. It is a critical mass game for them. Also, being an insurance company, a b/d, a custodian with both a quasi-independent branded (P2) and Indy SAI and a bank but lack. They lack investment banking, and getting the hardware, real estate, infrastructure and the sales force with AUM for a song is what they want. Wellschovia or BofAmerrill may sell cheap if rules change on fiduciary, since they will want (need by gov’t manipulation) to focus on higher margin businesses such as banking. Rates being what they are, b/d growth rate is historically 8-12%. “Banking” services has been a much bigger growth model historically, factor in present rates and voila. I haven’t a clue who, but AMP will buy before the year is out.
I continue to hear rumblings about AMP making a “big” purchase this year as well. It’s supposedly going to dwarf the HRB acquisition of last year. I asked a couple FVP’s I know at AMP why and what they want. Both said when in Minn. HQ they hear about AMP wanting a much bigger employee based platform and a full service one at that. Acquisition is the fast and relatively cheap way to do that vs. the slow road they’re on rolling out product one cascade at at a time as they’ve been doing it. I don’t know if Merrill is the play, but it’ll be something with major scale and who is left besides UBS?
AMP buying what is left of ML or UBS now that would be an EGO buster for the company blue bloods and the reps that are left.
VUL's for everyone!LOL funny. When I was given the spiel of 3 years trailing, 5 year forgivable by UBS just after they bought PW, their big speech to me was the VUL and the VA I could now offer. HEHEHE. Ironic, I submitted an acat to UBS and the rep on the statement was the same BM who pitched me back then. Small world I guess.
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