Merrill Lynch’s focus on building its Private Wealth Management division has taken a giant leap forward.
Private Wealth Management, which caters to high net worth clients with $10 million or more in assets, just recently reeled in the heavy-hitting team of Richard Steinberg and Jordon Waxman from Goldman Sachs, according to sources at both firms.
Steinberg and Waxman bring over $1 billion in assets to Merrill’s PWM division and will work out of the New York office run by Lee Weiss.
Merrill opened its pilot Private Wealth Management center in Century City, Calif., in the spring of 2001. The New York office opened in November 2001. Merrill plans to open 10 Private Wealth Management centers nationwide, focusing on cities where there is “a density of wealth,” such as New York, Los Angeles and San Francisco, according to the firm.
The basic premise of PWM is having brokers work in teams while specializing in areas like relationship building that address the special needs of ultra high net worth clients. Stanley O’Neal, Merrill’s president and CEO, says the firm has placed an emphasis on building teams, adding that one-third of Merrill’s 14,000 brokers are in teams.
Merrill is promoting broker teams from within the firm as well as making a strong push to lure high-producing teams from outside firms in order to boost the power and production of PWM. According to a source, "Merrill had its eyes on Steinberg and Waxman for awhile."
The addition of Steinberg and Waxman “is a coup,” says a Merrill rep on the East Coast. “They’re big-time, heavy-hitting brokers who have a tremendous base of high-net worth clients,” says a Goldman Sachs financial adviser. “They have a great reputation in the industry.”
PWM is in the midst of growing from about 150 brokers to its approximate goal of 300 to 500 over the next couple of years, according to the firm.
Private Wealth Management brokers are part of teams who have shown an ability to serve ultra-wealthy clients. They undergo a rigorous accreditation program offered by the firm. Merrill brokers interested in working in PWM must fulfill a series of requirements, including having at least $5 million in each customer account.
According to Merrill, "The number of individuals with investable assets in excess of $1 million has grown significantly as have their needs for more comprehensive asset and liability management, trust and charitable-giving solutions, estate-planning and numerous other services. … Private wealth management, once the purview of a few private banks, highly specialized firms and trust companies, is becoming an important business for more mainstream global financial service organizations."
According to surveys, more than 350,000 U.S. households have assets in excess of $10 million, with projections that this market segment will grow at an annual rate of 9% over the next five years.