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Cultural Shifts Leaving Cracks at Merrill Lynch

Cultural Shifts Leaving Cracks at Merrill Lynch

Over the past few weeks there has been an alarming amount of noise coming from the Bank of America/Merrill Lynch camp. The noise has begun to play a tune that sounds a bit like the cultural drift is taking its toll throughout both the advisor and management ranks. Not only has the pace of larger, consequential teams leaving picked up - but manager retirements and resignations are beginning to hit the wires.

So what is actually going on? Why has the pace of attrition quickened amongst advisors as well as management? This is where the story bifurcates.

Bank of Americas’ wealth management unit has been performing at an alarming clip over the past two years. Generally keeping up with its rivals at Morgan Stanley and UBS. The performance has been so strong that at times Bank of America’s earnings have been the direct beneficiaries (ed note, added April 16: It wasn't quite strong enough to offset the most recent quarterly loss.) While other departments across the bank have struggled to recover from the financial crisis, wealth management has been a boon for the Charlotte NC based bank.

Therein lies the problem. The bank mentality. As the advisor force produces at an alarming pace the “Bank of Merrill” simply views the wealth management unit as an important profit center and quickly attempts to tap into the gold rush. Instead of appreciating the handiwork of well managed financial practices, the bank culture can’t help but force “cross-selling”, new platforms, higher fees and Merrill Edge onto advisors and clients. A bank is a bank is a bank.

The effects trickle down slowly (over the course of nearly five years now) and the only buffer between the banks need to treat advisors as profit centers begins to tire. Branch managers, complex directors and regional directors have been fighting the good fight for a good while now, but at some point the dam breaks. Over the last few weeks we seem to be seeing significant leakage. RD’s and CD’s in prominent geographies have either announced early “retirements” or flat out resigned. These moves have come after another round of management reallocations and reassignments. When the cheerleaders begin to leave the gym before the game has ended, it is clearly going poorly for the home team.

Advisor departures are a bit easier to explain. When the organizational cheering stops, advisors are left to evaluate the firm without distractions. What is left of Merrill Lynch? Does it feel like it used to? Are we still considered the “Thundering Herd”? In the last 24 months Bank of America has adopted a new platform (Merrill One) which raises fees nearly across the board, legally removed the Merrill Lynch name from the books, aggressively adopted cross selling, disallowed advisors to collect fees on accounts under $250,000 and created a secondary advisor force called Merrill Edge. Whoa. That is a lot to swallow from a cultural standpoint. Remind me again how much retention I have left on the books?

And there is the million dollar (or multi-million dollar question) for many current Merrill Lynch advisors. Given that advisors that received a retention deal back in 2009 now owe less than 20% of the balance if they were to transition to a new firm; it is allowing them to take a closer look at the cultural drift inherent in the Bank of America marriage.

It seems that an uncomfortable percentage of advisors and management are unhappy with the current arc of the “Bank of Merrill”. The question is, will John Thiel and his executive team be able to slow departures and rebuild trust within the management ranks? Can Bank of America find a way to force overtime and convince the cheerleaders to come back into the gym? Time will tell.

Andrew Parish is the CEO and founder of AdvisorHUB and managing director of Axiom Consulting. Follow him @APadvisorhub


TAGS: Careers
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