Merrill To Lay Off 400 Brokers In Training Program

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Dec 15, 2008 8:39 pm

ABOM, Are you in Manhattan?

Dec 15, 2008 8:39 pm

Personally, it looks to me like wirehouses are going to be a collection of teams. As it is, I know a few teams that operate so independantly of their BD (Merrill in this case), that some of their clients refer to them as the “XYZ Group” rather than being with Merrill. The real powerhouse teams really identify themselves by their team, rather than their BD. And I think this is the wave of the future - you either come on with a team, or you don’t come on at all. Now, it may be that you have to prove yourself to the team, but that would be the team’s issue to deal with internally. In essence, the team is responsible for the newbies performance and paying them (obviously through their added production or servicing). Not only do I think this is the way of the future, but I think it makes sense. Basically, newbies have to be “sponsored” by existing teams. Just a thought.

Dec 15, 2008 8:42 pm

If powerhouse teams establish such a strong brand (a fact about which I have no doubt), why would they then settle for a sub 50% payout?

Dec 15, 2008 8:43 pm

The business is definitely getting worse.



It’s not as fun as it used to be. I get tired of these cronies who mastered there chops in the 90’s act like they walk on water. I feel like I’m starting to hate the job.



Anyone notice - there is no good way to leave the brokerage business. It’s not like a normal job. The firm has to make you feel like crap on the way out. Firms always blame the brokers when things don’t work out. Sure, the young brokers have some of the blame. The firms should take a look in the mirror as well.



Sometimes I wish thing thing would get nasty enough to take a few of the fatcats down too. I don’t really wish that because then the economy would be even more horrible. I just get tired of the untouchables.



Sorry for the ramble. I feel like beating the crap out of somebody. Time for the gym.

Dec 15, 2008 8:51 pm

The old under 50% payout argument.



If FA’s look at total comp (benefits, 401k match, marketing budget) not to mention paying salaries of CSA’s its a much higher payout. Also you have technology, manager (if yours does not add value than that sucks), ops department, back office, supplies (man that toner adds up), state registrations, legal, postage, real estate, etc…



Im sure the indy guys will retort this but there is a reason you find the biggest producers at big firms. It because they can focus 100% of time on wealth management and growing the biz.

Dec 15, 2008 8:57 pm

ABOM, Don’t want to fight, but the “old below 50% payout” argument is only “old” because it’s always been true. No argument that most HUGE producers are with wirehouses (mostly because they’ve been in the biz for 20+ years). But, trust me, if you can, that honest-to-goodness net payout to indys is WAY, WAY above 50% (stipulating a floor at around $250k).

Dec 15, 2008 9:20 pm

[quote=YHWY] If powerhouse teams establish such a strong brand (a fact about which I have no doubt), why would they then settle for a sub 50% payout?

[/quote]



For big producers at almost any firm, the total payout is over 50%. I can tell you, just at Jones, the payout (around 40%), the bonus (on $1mm producer) is probably 7-10%, the profit sharing has averaged in the 4-4.5% range, and you don’t pay for your assistant(s), your rent, utilities, software, hardware, licenses, ticket charges, seminars up to $300, basic office supplies (printer, toner, paper, fax, etc.), you don’t pay the employer FICA, your assistant’s benefits, the employer kicks in for some of your benefits, you add it all up and it compares fairly well to being independant, especially when you don’t have to do any of the bookkeeping, billpaying, etc.



The payout is smaller for small producers, so there’s more incentive for smaller producers to go indy. But at $1m+ (at all major firms), why would you want to waste your time on all that? The only way you can produce that much as an indy is with a team of people you are paying.



I’m not getting into the indy vs. captive argument, but the payout is not as far apart as some suggest.

Dec 15, 2008 9:26 pm

B24. Sure was far apart for myself. I think I’ll believe my “lying eyes” over your words. End of vendetta on my part. To each his own.

Dec 15, 2008 10:35 pm

[quote=Phan2om]Any confirmation of this news story? [/quote]

What?  My word is not good enough?   Here is the headline and author.  Maybe you can find the full story.

<p =“articlehed” style=“margin: 0px;”>“Merrill To Lay Off 400 Brokers In Training Program”

By ANNIE GASPARRO
A DOW JONES NEWSWIRES COLUMN
Dec 15, 2008 11:14 pm

is this article true?  its very believable.  there was an article in wsj today about b of a firng a significant amount of senior executives.  i’m in the training program but almost out of it. i also work on one of the top teams in the firm.  if this article is true, i wonder how this impacts me and everyone else.  oh well.  i learned when i first started to control what i can control and to not worry about what i can not.  despite what happens, this is still a great time to be in the business especially after the new year.

 
Dec 15, 2008 11:20 pm

[quote=tmoney47]is this article true?  its very believable.  there was an article in wsj today about b of a firng a significant amount of senior executives.  i’m in the training program but almost out of it. i also work on one of the top teams in the firm.  if this article is true, i wonder how this impacts me and everyone else.  oh well.  i learned when i first started to control what i can control and to not worry about what i can not.  despite what happens, this is still a great time to be in the business especially after the new year.

 [/QUO MERRILL TO LAY OFF 400 BROKERS IN TRAINING PROGRAM

Merrill Lynch is laying off roughly 400 brokers in training who have been with the firm between six months and two years.TE]

Dec 15, 2008 11:30 pm

[quote=Swordoftruth]The business is definitely getting worse.



It’s not as fun as it used to be. I get tired of these cronies who mastered there chops in the 90’s act like they walk on water. I feel like I’m starting to hate the job.



Anyone notice - there is no good way to leave the brokerage business. It’s not like a normal job. The firm has to make you feel like crap on the way out. Firms always blame the brokers when things don’t work out. Sure, the young brokers have some of the blame. The firms should take a look in the mirror as well.



Sometimes I wish thing thing would get nasty enough to take a few of the fatcats down too. I don’t really wish that because then the economy would be even more horrible. I just get tired of the untouchables.



Sorry for the ramble. I feel like beating the crap out of somebody. Time for the gym.[/quote]

No good way to quit?

Dude…save us all the grief…go into the office tomorrow and resign.  That way you there will be no reason to post your whiny drivel here any more.  It’s tough out there…we’re all working through it.

Dec 15, 2008 11:47 pm

This is what happens when a company giving investment advice somehow forgets how to managed their own investments.  Hmmmm…  seems that their is a lot of this going around.  Would you give your hard earned money to an advisor representing one of these companies?

Dec 16, 2008 1:11 am

Yes. I was told there were 1500 POA’s in the company but that was before the put a freeze on hiring and it looks like they did start letting them go last week. We’ll see if there’s more to come.

Dec 16, 2008 11:24 am
ABOM:

New FA’s are a huge put to firms in this bear market. Especially now a days where they have such big salaries spread over almost 3 years. When I was a newbie (only 13yrs ago) my salary was gone after about 6 mo’s. And new FA’s where profitable a lot faster because they where propritary fund distribution machines (remember B shares)!

In todays fee based world it takes forever for a new FA to be anywhere near profitable for a firm. You guys are talking about cuts - I can tell you in my branch the break even on an FA is around 350k anything under that is costing the branch money.

  This statement doesn't make sense  to me.   How could an office that houses numerous--or even just a handful--producers be so expensive to operate?   With EDJ's business model, it baffles me that we've not yet started closing offices. It seems to me that the wirehouse model would be far more economical and easier to maintain during recessions.
Dec 16, 2008 11:58 am
Borker Boy:

[quote=ABOM]New FA’s are a huge put to firms in this bear market. Especially now a days where they have such big salaries spread over almost 3 years. When I was a newbie (only 13yrs ago) my salary was gone after about 6 mo’s. And new FA’s where profitable a lot faster because they where propritary fund distribution machines (remember B shares)!

In todays fee based world it takes forever for a new FA to be anywhere near profitable for a firm. You guys are talking about cuts - I can tell you in my branch the break even on an FA is around 350k anything under that is costing the branch money.

  This statement doesn't make sense  to me.   How could an office that houses numerous--or even just a handful--producers be so expensive to operate?   With EDJ's business model, it baffles me that we've not yet started closing offices. It seems to me that the wirehouse model would be far more economical and easier to maintain during recessions.[/quote]

Don't know for sure, but they might allocate some of the corporate overhead to the branches. Attached to each broker are costs like compliance, registrations, marketing, research, etc... Maybe a BOM can chime in and shed some light on it.
Dec 16, 2008 12:07 pm
Borker Boy:

[quote=ABOM]New FA’s are a huge put to firms in this bear market. Especially now a days where they have such big salaries spread over almost 3 years. When I was a newbie (only 13yrs ago) my salary was gone after about 6 mo’s. And new FA’s where profitable a lot faster because they where propritary fund distribution machines (remember B shares)!

In todays fee based world it takes forever for a new FA to be anywhere near profitable for a firm. You guys are talking about cuts - I can tell you in my branch the break even on an FA is around 350k anything under that is costing the branch money.

  This statement doesn't make sense  to me.   How could an office that houses numerous--or even just a handful--producers be so expensive to operate?   With EDJ's business model, it baffles me that we've not yet started closing offices. It seems to me that the wirehouse model would be far more economical and easier to maintain during recessions.[/quote]

Jones didn't have to write down (er. lose) 50-plus billion in the subprime debacle.
Also, I don't think their branches are as costly to operate as their numbers indicate.

Dec 16, 2008 12:09 pm
Borker Boy:

[quote=ABOM]New FA’s are a huge put to firms in this bear market. Especially now a days where they have such big salaries spread over almost 3 years. When I was a newbie (only 13yrs ago) my salary was gone after about 6 mo’s. And new FA’s where profitable a lot faster because they where propritary fund distribution machines (remember B shares)!

In todays fee based world it takes forever for a new FA to be anywhere near profitable for a firm. You guys are talking about cuts - I can tell you in my branch the break even on an FA is around 350k anything under that is costing the branch money.

  This statement doesn't make sense  to me.   How could an office that houses numerous--or even just a handful--producers be so expensive to operate?   With EDJ's business model, it baffles me that we've not yet started closing offices. It seems to me that the wirehouse model would be far more economical and easier to maintain during recessions.[/quote] You work from home and get paid peanuts as a trainee at EDJ.  
Dec 16, 2008 3:33 pm

Can anyone shed some insight as to how this will impact potential FA trainees/hires?  I’ve been in 4 interviews in the last 3 weeks with them, meeting with everyone on up to the complex director and it has gone very well.  But this news doesn’t sound good.

  So, are they just kicking the lowest quintile or two or canceling the trainee process entirely until the economy rebounds?
Dec 16, 2008 3:52 pm
buyandhold:

[quote=Borker Boy][quote=ABOM]New FA’s are a huge put to firms in this bear market. Especially now a days where they have such big salaries spread over almost 3 years. When I was a newbie (only 13yrs ago) my salary was gone after about 6 mo’s. And new FA’s where profitable a lot faster because they where propritary fund distribution machines (remember B shares)!

In todays fee based world it takes forever for a new FA to be anywhere near profitable for a firm. You guys are talking about cuts - I can tell you in my branch the break even on an FA is around 350k anything under that is costing the branch money.

  This statement doesn't make sense  to me.   How could an office that houses numerous--or even just a handful--producers be so expensive to operate?   With EDJ's business model, it baffles me that we've not yet started closing offices. It seems to me that the wirehouse model would be far more economical and easier to maintain during recessions.[/quote]

Jones didn't have to write down (er. lose) 50-plus billion in the subprime debacle.
Also, I don't think their branches are as costly to operate as their numbers indicate.

[/quote]   BH, I've torn apart my P&L to verify every number.  Other than the infamous "technology" costs (though I've seen the actual breakdown, which makes sense), I can verify almost every single number.  But my background is in accounting, so P&L's are easy to decipher.  They are legit.   If I am not mistaken, don't POA's make a pretty lofty 3-year salary at ML?  That's the biggest nut for them.