Skip navigation

Merrill To Lay Off 400 Brokers In Training Program

or Register to post new content in the forum

85 RepliesJump to last post

 

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Dec 16, 2008 9:12 pm
[/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.   [/quote]   Won't argue with that. I'm not a conspiracy theorist and I don't even look at my PNL. ... I just don't think we're (new FAs) are the 'put' the some people say. If a firm hires 10 and two make it, wouldn't the future revenue provided by the two succesful ones easily pay for the training costs of the eight who failed? And even the eight who fail bring in SOME clients who provide future revenue and/or provide a boost for the next FA to make it.   Using a sports analogy, if the Los Angeles Dodgers wanted to save a few dollars, they could just release all those minor leaguers who don't produce any revenue and just sign free agents. Probably would be a major hole  in their major league team in a few years, though.                  
Dec 16, 2008 11:54 pm

Heads rolled in my office today !

Dec 16, 2008 11:57 pm
Phan2om:

Heads rolled in my office today !

  Out of curiosity, how many and at what LOS? 
Dec 17, 2008 12:01 am

Also out of curiosity, what’s the scuttlebutt regarding the Client Associates? Re-assigned to retained teams or jettisoned with their FC?

Dec 17, 2008 2:00 am
Phan2om:

Heads rolled in my office today !

  Am I safe to assume they were not on goal?
Dec 17, 2008 2:06 am

2 of the 3 in my office were over goal.  3 had to go, so…

Dec 17, 2008 2:09 am
chrisrd22:

2 of the 3 in my office were over goal.  3 had to go, so…

  Are you telling me they let go of guys who were on goal, hit their numbers but had not yet graduated POA?  That seems amazing!
Dec 17, 2008 2:49 am

i am on track to hit my goals and management says things i have nothing to worry about… did poa’s who were on track to meet their hurdles really get let go?



Dec 17, 2008 3:31 am

Amazing but true.  Also the rest us were basically told our numbers are now measured monthly, no target = no security.  Guess how December numbers look…

Dec 17, 2008 3:52 am

i have a friend that has been in production at ML for a year. hope he will be ok.

Dec 17, 2008 4:28 am

I know our sales manager has wanted us to always hit the monthly numbers regardless of our 3 month hurdles. My guess is that management is given a bonus from our monthly performance. What really is upsetting is that we just hired a few new PMD’s… If they are off the hook because they are in the new program, I would be so pissed… What management should do is take the successful POA’s and give them the option to stay in the POA program or enter the PMD program at a similar month. The POA program has proven to be a failure anyway.

Dec 17, 2008 4:35 am

What do all these acromyms me PMD, POA…POS lol…
I think if ML just eliminated those jumbled letters they would be getting somewhere!

Dec 17, 2008 5:40 am

PMD is the new training program that started in March of 2008, or around that time.

  POA is the training program that started in January 2002 to March 2008   POS, Don't know about this one.    
Dec 17, 2008 12:58 pm

all these “modern” training programs at ML have been miserable failures.  the firm probably loses around 200-300 Myn per year on training and recruiting, and this has been a consistent number.  This “new age” training philosophy is like welfare: once you get on it, it’s hard to get off.  The old days were more efficient: hire talented people, give them an opportunity, and a short time to make it.  Those that failed didn’t cost the firms much money; those that made it were profitable early (and on track early to bigger production). 

  I know, I know, I hear about how the business is "different" today, how people need more time, etc., but to me, it's always been about hiring the good talent...creme rises to the top...But, like all other things in life, to do the "right" thing requires allot more effort- something most managers gave up long ago for the sake of expediency and checking off their management boxes.
Dec 17, 2008 6:00 pm

A few details I know so far…

  My office lost three POAs on 12/5.  Two were in the program still, not meeting numbers.  The other was out of the program but didn't graduate (never reached the final number and was a low draw).   They are not letting go PMDs as, since the program is so new, few are even to the point of not meeting hurdles as yet.  The program began in February/March and those who are live have been told that there are monthly numbers to consider and that those not making it to month 8 having met the hurdles will be asked to resign/let go.   Also, those of us POAs that are left (we're down to 7 in my office/a few more in the complex) will also be held to that 8 month mark, even though it's not specifically noted in our program guides (which it is in the PMD guide).  Apparently, the 8 month mark is when the trainee is officially costing the firm money.   That's what I know.   Now, back to prospecting...
Dec 17, 2008 6:22 pm

[quote=buyandhold]

[/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.   [/quote]   Won't argue with that. I'm not a conspiracy theorist and I don't even look at my PNL. ... I just don't think we're (new FAs) are the 'put' the some people say. If a firm hires 10 and two make it, wouldn't the future revenue provided by the two succesful ones easily pay for the training costs of the eight who failed? And even the eight who fail bring in SOME clients who provide future revenue and/or provide a boost for the next FA to make it.   Using a sports analogy, if the Los Angeles Dodgers wanted to save a few dollars, they could just release all those minor leaguers who don't produce any revenue and just sign free agents. Probably would be a major hole  in their major league team in a few years, though.  [/quote]   I have no idea what you mean in that sentence above.  But as for the rest of your theory, I'm not sure it's all about the money to Jones (despite what people think).  I think it has much more to do with protecting themselves from FA's leaving as soon as thay find a better offer, or as soon as things get tough, jump for another salary somewhere else.  And Jones is not the only firm that has these in place.  In reality, you HAVE to make it tough for them to leave.  To piggyback your analogy above - it's why pro athletes haev contracts.  Otherwise, everytime someone got a bigger contract, everyone else wants to either go somewhere else for bigger money, or re-up their contract.  There ARE significant costs involved in recruiting, hiring, training, openeing an office, and paying salary/bonus to a newbie.  If they go through a year or so, and decide "hey I'll just go to Merrill and get in the POA program and draw another salary", well, Jones just lost a huge investment.  After all, every firm DOES invest in you to some degree.  They expect to either recoup some of that investment (keep someone long enough that they "got their investment back", "sell at a loss" because the FA didn't work out, or make a good return (an FA that works out well).  Obviously, they want all of them to be "ten baggers" (stealing a Peter Lynch term), but that's just not reality.  And a guy out one or two years is not leaving behind much, if anything for the firm, as he either failed (and thus underperformed), or is taking any good clients he had with him to another firm.
Dec 17, 2008 7:17 pm

I think it's a phenomenal time to be gathering assets.  However an individual in the Merrill PMD program who brings in 20mm in cash or dead assets gets no credit towards his/her hurdles.  Only annuitized assets count.  When you factor in the PC hurdle you are essentially forcing the FA/PMD to use C shares regardless of what's in the client's best interest.

Dec 17, 2008 7:43 pm

I don't think the training costs are THAT significant.  .... Of the $70,000 training cost total they throw around, most of that is guaranteed salary for training and the first year. I guess they could pay newbies zilch, but a) that's against the law, and b) even fewer qualified people would apply.  .... Most of Jones training is free -- it's provided by field trainers and mentors. There is no way that seven weeks on the phone to St. Louis, followed by three or four week-long classes costs $70k. Heck, you could send somebody to State College U for that.

Anyway, the whole thing must appear silly to an finacial service industry outsider. If GE or Proctor & Gamble hires you, they don't ding you for expenses on the way out if you quit or fail. And they don't look at your salary in the first years as a 'training expense', even though realistically, you're probably not worth it until several years down the road. .... If ML wants to prosper and grow, it can't be running off trainees.                
Dec 17, 2008 8:16 pm

I voiced the same sentiments about Jones’ exorbitant $75k in “training costs” a while back. My college degree cost about that, and as we’ve discussed in a previous thread, the majority of a new broker’s training is in the form of self-study and independent research.

  If I'd finished college with the same amount of knowledge about my major and minor as I've received in industry-related "training" from Jones over the past few years, I'd be suing my university for a refund.   Instead, you leave Jones, and they sue you.   I believe it was Spiff who provided a laundry list of reasons why the $75k is a bargain.   I'd imagine he's typing in tandem with me in response to your post.   Stay tuned...
Dec 17, 2008 8:29 pm

[quote=buyandhold]

I don't think the training costs are THAT significant.  .... Of the $70,000 training cost total they throw around, most of that is guaranteed salary for training and the first year. I guess they could pay newbies zilch, but a) that's against the law, and b) even fewer qualified people would apply.  .... Most of Jones training is free -- it's provided by field trainers and mentors. There is no way that seven weeks on the phone to St. Louis, followed by three or four week-long classes costs $70k. Heck, you could send somebody to State College U for that.

Anyway, the whole thing must appear silly to an finacial service industry outsider. If GE or Proctor & Gamble hires you, they don't ding you for expenses on the way out if you quit or fail. And they don't look at your salary in the first years as a 'training expense', even though realistically, you're probably not worth it until several years down the road. .... If ML wants to prosper and grow, it can't be running off trainees.  [/quote]   BH, you're missing the whole point.  I don't think you quite get it.  DO you realize what the cost of the entire recruiting/trianing department is?  If everyone stuck, they would only need about 1/4 of that department.  Do you know what they spend to fly all those newbs out 3 times, put them in the crummy hotel, and feed them?  Open an office, outfit it, pay a BOA, etc.?  Pay their salaries, benefits, etc?  Licenses, exam costs, Dude, add it all up, and it's a TON of money.  And almsot no newbs make any money for the firm in their first year or two.  And it is NOT just at Jones.  It's NOTHING like GE or PG or whatever.  All the brokerage firms are basically providing seed money to their investments.   Dude, I'm not defending Jones, or the practice in general.  I'm just telling you from a pure financial standpoint, the investment is HUGE.