BIG shakeup at Merrill/BoA?

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Jun 4, 2010 7:48 pm

I had a conference call today and in it they suggested that Merrill is about to let go of about 10 to 20% of their workforce!  Did anyone else hear this?  I made a few calls, but have nothing definate!  I am going to guess it is the bottom guys, but I was wondering what was out there!!!

Jun 4, 2010 8:33 pm

Any more specifics as to what call you were on?  Was this a ML/BAC call? After the grid cuts moving the lowest advisors in to the penalty box it seems like the mid-level advisors who have stuck around are the new bottom quintile.

Jun 5, 2010 4:49 pm

That was the gist of the call.  I am at a competitor, and our call was about looking for those folks in the middle as they are about to get squeezed pretty hard, if what we heard was correct.  It sounded like ML wants to be a little smaller and focus even more on HNW clients.

Jun 7, 2010 2:11 pm

[quote=Remo Gaggi]

I had a conference call today and in it they suggested that Merrill is about to let go of about 10 to 20% of their workforce!  Did anyone else hear this?  I made a few calls, but have nothing definate!  I am going to guess it is the bottom guys, but I was wondering what was out there!!!

[/quote]

Nooooo???

I would have guessed it was the Top Producers.  Sorry couldn't resist that one....

Jun 7, 2010 6:16 pm

I call BS. No way they lower grid on anyone under 400k.

Jun 8, 2010 11:10 am

I thought the grid was already pretty low for smaller producers?

Jun 9, 2010 7:23 pm

I checked back with some other people, it is not a grid thing.  The thinking is they are going to have ML just tackle the BIG clients and have their smaller guys either step it up OR move to bank branches.  I hope it is just internal talk, but that talk is a little freaky either way!!

Jun 11, 2010 2:11 am

Hey Remo, I don't think you are getting good info.  I've seen my mgmt attempt to recruit some lower end advisors lately....I doubt they'd be trying so hard if they were looking to make cuts.  Perhaps they want to send some to bank branches, But I don't think they want to do that either.  The Merrill upper management sees nothing worthwhile in the retail bank branches.

Jun 11, 2010 8:08 am

The wires are trying to buy assets because its very hard to grow organically today. So they are working the lower end of the advisor world. I think they will bring these guys in, then in two years cut the grid, and either be content to take 75% of the gross from these guys, or force the guys to leave. And if they leave but dont leave the busienss, they will go after them for the note and tie them up for a long time, in court.

Its interesting that this going after the lower end advisor model started right after MSSB won a big case in court against two brokers who left with a note outstanding.

Take the check. And live by the sword, die by the sword.

Jun 11, 2010 10:39 am

[quote=Sportsfreakbob]

The wires are trying to buy assets because its very hard to grow organically today. So they are working the lower end of the advisor world. I think they will bring these guys in, then in two years cut the grid, and either be content to take 75% of the gross from these guys, or force the guys to leave. And if they leave but dont leave the busienss, they will go after them for the note and tie them up for a long time, in court.

Its interesting that this going after the lower end advisor model started right after MSSB won a big case in court against two brokers who left with a note outstanding.

Take the check. And live by the sword, die by the sword.

[/quote]

Exactly.  They are buying assets and will look to retain them if the advisor doesn't make the cut.  The CitiMorg is doing the same thing and now offering reps as low as 250,000 100% deals.  They have very high hurdles built in, and most reps will not make the cut.  The money was spent to buy the assets and give them to the higher end producers to generate more revenue for the firm.

Sep 16, 2010 11:25 pm

I suspect that the aforementioned 'shake-up' will be targeted at the new advisors in the PMD program.

I am a PMD and have, over the past couple of months, heard some superbly cryptic language from my marketing director, manager, and coach that the weak performers in our PMD class will be cut at LOS 9 (i.e. month 9).  I heard this again from our marketing director just this week.  This time, it wasn't cryptic at all... He basically came out and said that some of us will be let go.  No details were given however as to the size of the layoffs or how they would decide who is cut. 

Personally, I am very worried about this.  I witnessed guys in the former POA program get cut... It sucked.  I worry that this will be the first round of layoffs for the new PMD program. 

Any thoughts, news, or inside information, or clarity on this matter would be greatly helpful to us. 

Thank you Remo for sharing your news.   Please keep it coming should you hear anything else! 

Sep 17, 2010 3:40 pm

 Hi: I am the editor-in-chief of Registered Rep. We checked in with Merrill and a spokeswoman said told us that she had not heard anything about Merrill making "across the board cuts," or cutting back on class sizes for trainees. She said it "doesn't make sense" that Merrill would be cutting back on trainees -- since Merrill has said it it is in a hiring mode. "If anything, we want to add trainees -- we are hiring," she said.

 

On the specific thread here, the Merrill spokeswoman thinks it might be a local situation related to someone who hadn't made their production targets. "It's tough," she said. "You have hurdles to cross, it is a tough business to be in. I haven't heard anything about them cutting the [trainee] class sizes -- or across the board -- this [thread on forum] might just be performance related. Training prepares you for this, but it is tough starting out in the first few years..." Ain't that the truth, it's a tough job.

Sep 17, 2010 3:47 pm

I think she took you for a ride, by couching her answer...

Of course they are going to lose 20-30% of their trainees, they(trainees) aren't hitting their numbers. And that is why ML is still hiring to finda batch of trainees that can replace that 20-30% (being generous, probably much higher) that is failing out.

That is how this industry works, it cost too much time and money to make sure someone is successful(and the other caveat is no has figured out how to do it).

Sep 17, 2010 3:58 pm

That's true: Trainees often fail and attrition is high. We have written on this over the years. Here is a story from an industry consultant we published in March about how important branch managers are in the training process http://bit.ly/d0qYtr

Training was shelved in favor of poaching FAs from rival firms, as you know. http://bit.ly/9k9mLf

And here is a story about how expensive it is to train --- given the high rate of failure. http://bit.ly/9iGccn Interestingly when an FA begins his career has a lot to do with his success or failure, to wit, if he starts in a bull market, he has a better chance of making it.

But there are success stories. http://bit.ly/bFMUT7

Sep 17, 2010 4:10 pm

squash2, I just PM'ed you.

Sep 19, 2010 12:28 am

All of the wirehouses have zero training, and ask for impossible hurdles today - it is more revenue generated than asset base. Some of the guys that RR showcased have strange numbers.....11 AUM with 250k production? Hmmm.....that means he is charging 2.5% on products with no or little trail to live on? Like to see his numbers in Year 2. 

The FA who manages 40 million with 250k in income sounds more like reality. But, in 2 years he met with 375 families and converted them to clients.....BS on that too. Overweight dude like that ain't hustling and getting 15 clients a month like clockwork. 

Sep 19, 2010 10:01 am

The fat guy took over an EDJ office.. so he didn't do anything..

The AGE/Wells guy.. works in his brothers office and sold a lot of VAs(hence the 2.5% calculation)

Sep 19, 2010 7:51 pm

David, that was huge, thank you.

Sep 20, 2010 8:53 am

[quote=squash2]

The fat guy took over an EDJ office.. so he didn't do anything..

The AGE/Wells guy.. works in his brothers office and sold a lot of VAs(hence the 2.5% calculation)

[/quote]

Or he could be doing a lot of insurance and/or A-shares.

That's the thing early on in your career, when you have very few assets, your velocity can realistically be over 1-2%.  But it's just a statistical anomoly due to the low AUM.

And yeah, that EDJ guy?  That was a stupid article - bad editorial work.  He obviously took over an office (or a big GK or retirement).  What they NEED to do (for THAT type of article) is highlight newbies that have done it from scratch purely on their hard work.  Nobody is impressed because you took over someone else's book.

Sep 21, 2010 1:08 am

It makes me laugh when I see guys pontificate over their assets, and I knew damn well they inherited or got handouts when teams left. This industry is one big frikkin joke sometimes.