BAC is Imploding and I am Knee Deep in Crok Tears
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BAC starting with the Hugh McColl years was committed to being the biggest for no other reason other than bankers have to do something to justify their mindless daily activities. By acquiring other institutions revenue you confidently announced “we are growing”. . . which is a load of crap. You did nothing to grow that business. You created more layers, more regional VPs and more of your precious “reports”.
You bought a profitable business that achieved its success totally apart from your influence and then you put your short sleeve , short tie hand picked crew on the scene and "assimilated" whatever you bought. That assimilation process ipsofacto ruined your previously successfully run business. Multiply that game times 10 to the power of 10 and hand off the minagerie to your next bulge eyed humorless goof ball to run the show. Not to be out done, the next "visionary" with tunnel myopia pursues the same path but only bigger and more audaciously stupid. Compare this malignant growth model to Steve Jobs creating wholly new products and industries and you will see how hollow and pathetic BAC is as a concept, much less a company. They have returned the monstrocity to its true intrinsic value.....the cost of sinage and 100,000 Aeron Chairs.Pretty true for most of the large banks, the quest for size has ruined shareholders and employees.
merrill killed bac, but bac sr mgmt’s ego moved forward with buying merrill. this mess, coupled with citi’s trainwreck will change the industry for years to come.
the upcoming onslaught of regulations will likely limit the size of any given bank and likely force break-ups of the "supermarkets." brokers may get their day once again.JPM seems to be getting it right… all advisors work for the bank(not additional brokerage) with the exception of the bear stearns people they added(only about 350 I heard)…
Of course this is Jamie Dimon...seems to know his stuff.yoU HAVE TO understand what economists call quaisi rents, a term invented by, I believe, Lord Albert Marshall, the greatest economist of the late 19th century. Essentially it amounts to the fact that people with extraordinary talents receive extraordinary rewards for doing what nobody else can do as well (see NBA players compensation). Advisors can be in essentially the same situation – maybe our talents are not as unique as Magic Johnson, but thats besides the point.
So if star brokers are not compensated based on their revenue marginal product we have the option of walking accross the street to Bank B from Bank A, maybe even go to Bank C. (BAC _ get it?). Or maybe you go to an independent RIA? The conclusion re: Marshall is that anyone who can capture quaisi-rents at place B can get the same capture at place A or C (there I go again). Having actually worked at BAC when it was a San Francisco treat, the thing that commercial bankers cannot get over is that there are people in the investment mgt and investment banking businesses that ordinarily make 10 times what the CEO goes (again based on quaisi-rents and labor market conditions in general). And BAC in particular is retail thru and thru, with a real dime store mind set. I am waiting with open arms for all you MER studs that wanna break free, and join an established RIA w/ trading, research, marketing, portfolio design, etc (the infrastructure) already in place, even though the necessity to act ethically may be a challenge for some.What a great recruiting line - question the ethics of a group. CFP ethics consider this unethical as do many other groups. No single group or firm has cornered the market on ethical behavior. Madoff was an independent. Shrenker was an indy. When you drain the swamp, you find the snakes. The difference that is going to make more sense between indy or firm is independent oversight. IMHO the RIA world is dire need of its own cooking. Time to move past a brochure and into the light of day. The two acts (33 and 34) need to be combined. If the FPA and others really care about the client then let’s really reduce the confusion.
Then we can compete on a level playing field AND the client is taken care of beyond the mountain of disclosures they need to sign, and sign, and etc.