Merrill To Lay Off 400 Brokers In Training Program

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Dec 15, 2008 5:32 pm

What's the word at the ML offices?  Have they cut everyone or just the lower quintiles?  What about people who are no longer in the program?

--WM

Dec 15, 2008 5:40 pm

They have been cleaning house of our trainees. Most of the remaining POA's are gone and many of PMD's have been released last week. I think it was because they missed their goals. It sounds like many had brought in the assets but the market has taken them below their goals.

Dec 15, 2008 5:52 pm
MERRILLBANKER:

They have been cleaning house of our trainees. Most of the remaining POA's are gone and many of PMD's have been released last week. I think it was because they missed their goals. It sounds like many had brought in the assets but the market has taken them below their goals.



The news article hit the Dow Jones Newswires today at 3:59 today.  It's subscription only so I can't post a link.  There is even mention of reducing newer graduated advisors.

--WM

Dec 15, 2008 6:03 pm
WealthManager:
MERRILLBANKER:

They have been cleaning house of our trainees. Most of the remaining POA's are gone and many of PMD's have been released last week. I think it was because they missed their goals. It sounds like many had brought in the assets but the market has taken them below their goals.



The news article hit the Dow Jones Newswires today at 3:59 today.  It's subscription only so I can't post a link.  There is even mention of reducing newer graduated advisors.

--WM

 
Can you cut and paste the article?
Dec 15, 2008 6:21 pm
bullinachinashop:
Can you cut and paste the article?



I am not one to violate copyright laws, especially against my former employer.  Look on the Dow Jones Newswires.

Dec 15, 2008 6:26 pm
WealthManager:
bullinachinashop:
Can you cut and paste the article?



I am not one to violate copyright laws, especially against my former employer.  Look on the Dow Jones Newswires.

 
Rules were made to be broken.  See current financial situation.  Everybody's doing it.  Do it, do it, do it now (said in a Starsky & Hutch way).
Dec 15, 2008 6:38 pm

They have done that before during a bad market. Fire all the trainees.  Nice guys. 

Dec 15, 2008 6:55 pm
albert:

They have done that before during a bad market. Fire all the trainees.  Nice guys. 



You do understand that they are running a business, don't you?

Dec 15, 2008 7:01 pm
Hank Moody:
albert:

They have done that before during a bad market. Fire all the trainees.  Nice guys. 



You do understand that they are running a business, don't you?

 
I know, but what they dont understand is that almost every bigger producer ive seen the main reason he is not doing 500K gross or less is because he stayed in one spot and leached off the accounts from trainees and younger brokers who could not or did not stick it out.  If they get rid of this avenue than the bigger guys will realize they really dont know that much about how to build their business.
Dec 15, 2008 7:05 pm

fritz, I honestly think you're on to something. I believe that the business is headed toward the point that only HUGE producers are tolerated at big wirehouses (and will reap the benefits as the attrition mounts. I'm afraid it will be the previously "respected" $500-650k+ folks who will simply join the ranks of the "attritted" (Yes, I made that word up. If the made-up shoe fits...)

Dec 15, 2008 7:09 pm
fritz:
I know, but what they dont understand is that almost every bigger producer ive seen the main reason he is not doing 500K gross or less is because he stayed in one spot and leached off the accounts from trainees and younger brokers who could not or did not stick it out.  If they get rid of this avenue than the bigger guys will realize they really dont know that much about how to build their business.
 
Are you serious?  If say 1 in 20 trainees makes it to year 5, then that one guy obviously knows what he's doing.  How does a senior broker who has built a big business doing 500k+ not know much about building a business? 
 
You're crazy.  They have a big business because they built it.  They were smiling and dialing and winning new clients.    It's not an easy thing to consistently do. 
Dec 15, 2008 7:12 pm
YHWY:

fritz, I honestly think you're on to something. I believe that the business is headed toward the point that only HUGE producers are tolerated at big wirehouses (and will reap the benefits as the attrition mounts. I'm afraid it will be the previously "respected" $500-650k+ folks who will simply join the ranks of the "attritted" (Yes, I made that word up. If the made-up shoe fits...)

 
Agree with you 100% Think it may take a year or two to play out, i am not even sure the guys calling the shots know it yet since many of them do not know anything about what its really like to be in production..but do think if things continue as is, there will only be a small % of the current people at the wirehouses.  Not sure what happens to the other 90% of the people (Indy, working at call centers etc) that become "attritted."  Think I'll fit into that group eventually, but maybe depends on how the market does, 5000 DOW and I am ATTRITTED
Dec 15, 2008 7:16 pm
YHWY:

fritz, I honestly think you're on to something. I believe that the business is headed toward the point that only HUGE producers are tolerated at big wirehouses (and will reap the benefits as the attrition mounts. I'm afraid it will be the previously "respected" $500-650k+ folks who will simply join the ranks of the "attritted" (Yes, I made that word up. If the made-up shoe fits...)

 
I don't think this will happen to the extent you do.  I would actually prefer it to, as I would have less competition, but if the wirehouse industry consolidates to only big producers, there would come a point where personal relationships are lost because the advisor has too many clients, older advisors will have retired, and no young guns would be there to prospect and bring in new money.
 
The wirehouses will consolidate and their work force will shrink.  But things are cyclical and some things will never change.  This isn't new...
Dec 15, 2008 8:03 pm

Any confirmation of this news story? My personal theory is that ML/BofA wants to shrink the advisor force.  Figured the comp plan will take out allot of lower producers, and was waiting to see what they do with the trainees.

Dec 15, 2008 8:09 pm

snag,
 The one factor that I think has changed (and NO, I'm not saying that it's "different this time").
Is that individual investors are now so ubiquitous, that the vast majority of them understand that there are different ways to get their investment advice. I don' t think that firms like Merrill have leverage of exclusivity that they once had. Mostly, I just continue to see FCs with very profitable books being treated as though they are not profitable (enough). The past year+ on the indy side has only reinforced that notion in spades. HUGE wirehouse folks will always kill it, but their model is not the only way anymore.

Dec 15, 2008 8:11 pm

Glad to see Mother Merrill is alive and well!

Dec 15, 2008 8:13 pm
YHWY:

snag,
 The one factor that I think has changed (and NO, I'm not saying that it's "different this time").
Is that individual investors are now so ubiquitous, that the vast majority of them understand that there are different ways to get their investment advice. I don' t think that firms like Merrill have leverage of exclusivity that they once had. Mostly, I just continue to see FCs with very profitable books being treated as though they are not profitable (enough). The past year+ on the indy side has only reinforced that notion in spades. HUGE wirehouse folks will always kill it, but their model is not the only way anymore.



Please say "african-americans" instead of "spades." Thank you.

Dec 15, 2008 8:17 pm

I apologize for the oversight and thank you for potentially saving me from HUGE liability. 

Dec 15, 2008 8:34 pm
Hank Moody:
albert:

They have done that before during a bad market. Fire all the trainees.  Nice guys. 



You do understand that they are running a business, don't you?


Not the kind of business I want to run.  How can a manager take on the responsibility of hiring a trainee and then the firm we just punts  all trainees? The same firm that suggested we should find some trainees? Oh. I am sorry about that career change I encouraged you to make.


I had 2 potential hires. One joined us and the other ML for a higher training salary and some sort of a "safety net". Market got bad and ML fired all the new guys including this guy. Guy that joined us same time ,and we did not just sweep anyone new, is a big producer now and a good broker.
Dec 15, 2008 8:36 pm

New FA's are a huge put to firms in this bear market. Especially now a days where they have such big salaries spread over almost 3 years. When I was a newbie (only 13yrs ago) my salary was gone after about 6 mo's. And new FA's where profitable a lot faster because they where propritary fund distribution machines (remember B shares)!



In todays fee based world it takes forever for a new FA to be anywhere near profitable for a firm. You guys are talking about cuts - I can tell you in my branch the break even on an FA is around 350k anything under that is costing the branch money.