Perhaps it was inevitable: After a couple of years of ownership changes, management musical chairs and shifting business plans, Quick & Reilly has finally succumbed.
Bank of America, which inherited Quick as part of its acquisition of FleetBoston in October 2003, announced it is folding the discount brokerage into its Banc of America Securities unit.
The move is part of a broader overhaul that includes a management reshuffling and brokerage-workforce expansion. With the recent departure of Alan Schroder, who came to BofA two years ago, the firm has named Michael Santo head of the brokerage unit. Meanwhile it is adding advisors, 900 new ones and counting.
All the moves are aimed at getting BofA to the top among bank brokerages. Though it now ranks third, it has a long way to go to catch the likes of Wachovia, whose advisors number in the five figures. BofA, meanwhile, has a total of 2,200.
“I think 2004 is certainly going to be a transition year for Bank of America,” says one recruiter.
Even though its name is disappearing into the monolith that is BofA, Quick & Reilly gave the bank the jump-start it needed to start dreaming bigger brokerage dreams. “Overnight, you're talking about doubling the number of advisors and purchasing access to wealthy markets in the Northeast,” says Tim Carpenter, senior analyst at Watchfire GomezPro, a financial services research firm based in Waltham, Mass.
Still, that doesn't mean business as usual at the former Quick. The low-asset customers that might have been typical at Quick in years past are no longer the focus of that unit.
As of the end of 2003, Quick had 900 brokers and held $44.3 billion in customer assets, or about $48.8 million in assets per rep, according to Charles Salmans, senior vice president of corporate communications for Bank of America. By one measure, that's actually better than Bank of America, which averages only about $41 million per rep.
Several recruiters say the firm has generally tended to look for reps with a few years in the business and with annual gross production around $300,000. This meant they were not big pursuers of the superstar-types that most other firms drool over. However, they were pursuing clean brokers with fee-based businesses.
Whether that will change with the new regime remains to be seen.
Regarding recruiting strategy, Salmans said, “The kinds of people Bank of America has been recruiting and the people Quick & Reilly were recruiting were not all that different.”
However, Quick has been in trouble in the eyes of analysts for years. Its attempt to transition from a discount brokerage into a wealth management house has been notably less successful than the same effort at rival Charles Schwab & Co. Many felt that Quick's trading platforms — and business plan — were outdated and not catching up with nearly the speed necessary.
“Every single Quick manager in the country is scared, and they probably should be,” says a major recruiter.
Meanwhile, there are other personnel moves afoot. Don Froude, the beleaguered former president of Quick, will now serve as head of mutual fund sales for Columbia Management Group, BofA's asset management arm. Columbia recently merged with the maligned Nations Funds, and has a total of $210 billion assets under management.
In addition, Stan Gregor is the interim president of what's left of Quick, and he'll transition into regional head of brokerage for the Northeast, a market Bank of America has been aiming for in recent years.