Due Diligence
Merrill Wins Some, Loses More

Merrill Wins Some, Loses More

Referee-Holding-up-the-Winning-Boxers-ArmYou win some, you lose some. Merrill Lynch announced Monday that it hired teams and individual advisors representing $813 million in client assets away from its direct wirehouse rivals Wells Fargo Advisors, UBS, and Morgan Stanley during the month of July. That news came as RIA consolidator HighTower announced it had lured over another veteran Merrill team with $1 billion in client assets. What’s better: two guys with $1 billion or seven guys with $813 million? Unfortunately, those seven guys represent a lot more overhead for Merrill.

Also, the new recruits probably got some pretty healthy forgivable loans to come on board. Recruiting deals have “stayed the same virtually,” says recruiter Mindy Diamond, a columnist for this magazine. “In some cases, they may be willing to reimburse advisors for a part of their unvested deferred comp on top of the already huge deal,” she said, referring to the wirehouse firms doing the hiring. At last count, the best deals were breaching 300 percent of an advisor’s trailing twelve months production,with part of that upfront and the rest dependent upon the clearing of certain growth hurdles.

The advisors joining Merrill in July include Tony Murphy and Lewis Matthews, who joined Merrill’s Walnut Creek, Calif. office from Wells Fargo with $342 million in client assets and $1.2 million in production. From UBS comes Michael Borza, who joined its Virginia Beach, Va. Office with $174 million in client assets and $1.01 million in production. James Wolslager, a legacy Smith Barney advisor, joined the firm’s Austin, Tex. Office, bringing $71 million in assets and $1.2 million in production. And Bernard Orbach, Erik Vatter and Matthew Groff joined Merril’s Harrisburg, Pa. office from Morgan Stanley with $226 million in assets and $2.1 million in production.

As for the $1 billion team that left for Hightower, Paul Pagnato and David Karp worked in Merrill’s private banking division. HighTower in particular has been pretty busy recruiting from Merrill of late.

But Merrill says the HighTower hires are no big deal in the larger scheme of things. "We’ve had 8 straight quarters of advisor growth, advisor attrition continues at historically low rates, and we are focused on adding quality advisors--especially through our training program," said a spokesperson in an email.

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