Thoughts on ML departures (lack of)

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Dec 1, 2008 9:56 pm

As an ex ML advisor in the Northeast, I thought many ML FA's would be leaving with the lack of retention or minimal retention bonuses given to less than 1mm producers. After I thought about it for awhile, it may just be that many (definitely not all) ML FA's have not really built a business, but rather inherited clients from flunked out POA's/PDPr's throughout the years. The majority of FA's probably have a substantial part of their book that was acquired this way. We heard quite a bit of crying about how 'I'm out of here and the firm doesn't value me...blah, blah, blah.' Now several weeks later there hasn't been this mass exodus that was supposedly going to happen. Is it that these FA's decided to pull their panties up and stay put realizing that these inherited clients are glued to ML and although they may have an assigned FA, they are a client of their firm and won't follow you anywhere. I've got to give credit to ML. They are #1 for a reason...even with BofA or not.

Dec 1, 2008 9:59 pm

Might be just that anyplace they would go is just as much in the toilet as ML. Or maybe its just too early. Takes time to negotiate a deal and prepare for the day of the move.
The question is, with BAC stock price where it is, what happens - i cant imagine the deal not going thru, but if BAC stock keeps going down, they are going to have to change the deal. What if that doesnt work?> Shudder to think.

Dec 1, 2008 10:00 pm
bronson2000:

As an ex ML advisor in the Northeast, I thought many ML FA's would be leaving with the lack of retention or minimal retention bonuses given to less than 1mm producers. After I thought about it for awhile, it may just be that many (definitely not all) ML FA's have not really built a business, but rather inherited clients from flunked out POA's/PDPr's throughout the years. The majority of FA's probably have a substantial part of their book that was acquired this way. We heard quite a bit of crying about how 'I'm out of here and the firm doesn't value me...blah, blah, blah.' Now several weeks later there hasn't been this mass exodus that was supposedly going to happen. Is it that these FA's decided to pull their panties up and stay put realizing that these inherited clients are glued to ML and although they may have an assigned FA, they are a client of their firm and won't follow you anywhere. I've got to give credit to ML. They are #1 for a reason...even with BofA or not.

 
#1 for a reason ..even with BofA or w/o???
 
Dont know if you were watching that weekend, but they were going Bankrupt in 24 hours if BofA did not step in.
Dec 1, 2008 10:02 pm

Did you ever think they may be waiting for JAN 09?

Dec 1, 2008 10:37 pm

Why not 12/08? 2/09? 4/10? Is 1/09 when they're off their period?

Dec 1, 2008 10:46 pm

its inertia & fear. look at most acquisitions the retention rates are always very high. Especially in this market many people are in major fear mode. Although I doubt that 98% rate MER is claiming that seems too high but that means about 100 (2% of 40% of 12k) of best advisors left SO FAR.



since they put the protocol language in contract and advisors can leave anytime you may see more departures in Jan.

Dec 2, 2008 8:17 am

I think the exodus begins 1/09.  Three factors: a) taking time to negotiate the best deal. b)waiting to see the new comp plan (does it validate the message of the retention package). c) FCCAP vests 01/01/09.

 
I think within one year the headcount is down substantially- but that may be exactly what BofA wants.  Who needs 20,000 FAs when you can do the same business with 12,000??? Remember BofA is looking at MER as a portion of their overall business (i think MER represents 13% of their business).  So BofA is more looking at the profitability of their business unit, not as worried about sinking allot of capital into the "future."
Dec 2, 2008 8:20 am
bronson2000:

As an ex ML advisor in the Northeast, I thought many ML FA's would be leaving with the lack of retention or minimal retention bonuses given to less than 1mm producers. After I thought about it for awhile, it may just be that many (definitely not all) ML FA's have not really built a business, but rather inherited clients from flunked out POA's/PDPr's throughout the years. The majority of FA's probably have a substantial part of their book that was acquired this way. We heard quite a bit of crying about how 'I'm out of here and the firm doesn't value me...blah, blah, blah.' Now several weeks later there hasn't been this mass exodus that was supposedly going to happen. Is it that these FA's decided to pull their panties up and stay put realizing that these inherited clients are glued to ML and although they may have an assigned FA, they are a client of their firm and won't follow you anywhere. I've got to give credit to ML. They are #1 for a reason...even with BofA or not.







ML advisor's more than any others believe they are "it" why would you leave "the firm?" Since they believe this, they then rationalize that it is their fault for not having high enough production to have earned the bonus.

Dec 2, 2008 8:53 am

I think you've all touched on various reasons:


1. Some just stay because they don't have the energy/desire to move their book/they're comfortable/they keep inheriting assets, etc.
2. Who wants to move during the holidays?
3. Where the hell would you go that is any better??
4. You don't know what the comp plans are going to be at ML, or any other wire, for that matter.
5. The market is horrible and many clients might be afraid to move.  I have heard this from one friend that just moved TO ML from MS.
 
And let's not forget, Merrill/BAC's INTENT is to have attrition.  They don't want 16,000 FA's, or whatever the number is.  My guess is that they want more like 12,000 higher producers.  Yes, they will lose some top producers in the process, but that goes with the territory.
Dec 2, 2008 10:46 am

Most are in a holding pattern until the new comp plan comes out.

Dec 2, 2008 4:08 pm

The Merrill guys I've spoken to justify keeping their feet planted because they do not yet know what they're running from. Once they get more information, I'm sure a good chunk of them (well, hopefully at least) have a backup plan to execute if need be.

 
I, personally, think it would be premature for them to leave without knowing the facts. These guys worked their asses off to have a desk at ML. Why just throw that away?
Dec 2, 2008 11:01 pm

I would add the big reason most are not leaving is the sheer denial of what has just happened to the business in a few short months. It can be like Stockholm syndrome. It is harder to leave than to stay, no matter how bad it may get. They now BofA is a Walmart in the fin. business. They know they have managers that have no idea what "wealth management" is about. They know that even if ML folks run the show for a little while, it will not last. It NEVER has with ANY BofA acquisition. They are just shell shocked and don't know what to do and are too busy trying to keep their clients doing the right thing.



At some point, the news will ebb and the smoke will clear and then they will make a decision. The problem will be, that the "deals" will be much smaller for much fewer.

Dec 2, 2008 11:19 pm

Not ML/BAC specific, probably implies to large part of the investment business over the next 12-24 months.  But cant help but think of the scene in the movie "Titanic" when the ship finally went into the freezing atlantic and 1000 people or so popping back out of the water looking for anything to float on.  That is kind of what the brokerage industry will look like to me soon.

Dec 2, 2008 11:33 pm

I cannot help but see your point. I want to think all will be well, but I think we are deluding ourselves. I'd love to know how did the average Wall Streeter survived through the great depression. What were brokers doing then. What was the survival rate of brokers during that period. Obviously times and products are vastly different, but history often repeats itself. I have tried to find out more on this subject out of curiosity, but to no avail. 

Dec 3, 2008 1:03 am
anabuhabkuss:
I, personally, think it would be premature for them to leave without knowing the facts. These guys worked their asses off to have a desk at ML. Why just throw that away?



Because soon it won't be ML any longer.  Boiling the frog, just like at WachEdFargo.

Dec 3, 2008 1:05 am
3rd ID:

I cannot help but see your point. I want to think all will be well, but I think we are deluding ourselves. I'd love to know how did the average Wall Streeter survived through the great depression. What were brokers doing then. What was the survival rate of brokers during that period. Obviously times and products are vastly different, but history often repeats itself. I have tried to find out more on this subject out of curiosity, but to no avail. 



I think you're spending too much time watching the evening news, and you're going to miss the incredible opportunities that lie in front of you because you're attitude is so negative.

Tell me, what basis in fact do you have to compare this market and this economy to the Great Depression?

Look at the facts, not what the talking heads say all the time....they keep repeating the "Great Depression" lie of an analogy so much that people who aren't able to think critically are starting to believe it.

Seriously, your posts are bringing me down and I wish we had an 'ignore' button on this forum.

Dec 3, 2008 7:36 pm
BukiRob2:
bronson2000:

As an ex ML advisor in the Northeast, I thought many ML FA's would be leaving with the lack of retention or minimal retention bonuses given to less than 1mm producers. After I thought about it for awhile, it may just be that many (definitely not all) ML FA's have not really built a business, but rather inherited clients from flunked out POA's/PDPr's throughout the years. The majority of FA's probably have a substantial part of their book that was acquired this way. We heard quite a bit of crying about how 'I'm out of here and the firm doesn't value me...blah, blah, blah.' Now several weeks later there hasn't been this mass exodus that was supposedly going to happen. Is it that these FA's decided to pull their panties up and stay put realizing that these inherited clients are glued to ML and although they may have an assigned FA, they are a client of their firm and won't follow you anywhere. I've got to give credit to ML. They are #1 for a reason...even with BofA or not.




ML advisor's more than any others believe they are "it" why would you leave "the firm?" Since they believe this, they then rationalize that it is their fault for not having high enough production to have earned the bonus.

 
You nailed it.  Old movie from long time ago Stepford wives..were the wives left and came back brainwashed to do whatever the husband wanted,, that is were ML guys go for "training" when they come back they are mentally shot.  Your quote is right on from the guys I have seen/known at ML.  They cant even talk anymore normal going in you ask him his thoughts about the market/stock and he will start the answer with "we".  No longer can form his own opinion.
Dec 3, 2008 7:43 pm
3rd ID:

I cannot help but see your point. I want to think all will be well, but I think we are deluding ourselves. I'd love to know how did the average Wall Streeter survived through the great depression. What were brokers doing then. What was the survival rate of brokers during that period. Obviously times and products are vastly different, but history often repeats itself. I have tried to find out more on this subject out of curiosity, but to no avail. 

 
Apples.  Many brokers sold apples on the street as a side job during the depression.  No joke.
Dec 3, 2008 8:46 pm
HymanRoth:
3rd ID:

I cannot help but see your point. I want to think all will be well, but I think we are deluding ourselves. I'd love to know how did the average Wall Streeter survived through the great depression. What were brokers doing then. What was the survival rate of brokers during that period. Obviously times and products are vastly different, but history often repeats itself. I have tried to find out more on this subject out of curiosity, but to no avail. 



I think you're spending too much time watching the evening news, and you're going to miss the incredible opportunities that lie in front of you because you're attitude is so negative.

Tell me, what basis in fact do you have to compare this market and this economy to the Great Depression?

Look at the facts, not what the talking heads say all the time....they keep repeating the "Great Depression" lie of an analogy so much that people who aren't able to think critically are starting to believe it.

Seriously, your posts are bringing me down and I wish we had an 'ignore' button on this forum.



I agree with Hyman. There is no way we are going into another Great Depression. The controls and tools the govt has at its disposal now are so much bigger than back then. The news has been so bad. I am getting a sense that the market is not reacting to bad news as it did a few months ago. I really think a bottom has been put in. Yeah we have some tough sh$t ahead of us, the automakers, credit card defaults, etc. But its all baked in, and things get better from here - maybe not right away, but i'm convinced the next 2000 points is up, not down.
The homebuilding stocks are up 30% off their lows. Is the market telling us something there? Very possible. Maybe we arent quite turning the corner on housing, but i think as far as expectations go, the worst is over.
The govt has already shown they wont let a Citi, or Wachovia, or ML (oops-sorry -BAC) fail.

I am optimistic from here. Not only regarding the market, but our business. Opportunities are going to be huge to rebuild.
Just my 2 cents

Dec 3, 2008 9:29 pm

Sorry Hyman, I'll lighten up. I dont want to mess with anyones head. Its tough enough keeping it the game here. I'm really not that negative. Im still very busy working and putting money to work. Pulled the trigger on another managed acct today. So its not all bad and Im not all that negative. I am very concerned and vigilant about the economy and the continued debasement of the dollar with all this money creation going on. I am alert for those opportunities that you speak of. Peace.