Merrill's Destruction
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[quote=Greenbacks]32 x leverage
And they give financial advice Who in the world would listen to a company like that [/quote] Do any of your clients invest in zero-down real estate? I bet they do. So, in effect, you're calling your clients morons. How does that sit with you?And the side of ML that deals directly with retail investors (Global Wealth Management) had zero to do with any aspect of what “brought them down.”
They were trucking right along earning record profits while a hand full of folks were making some very bad decisions.Zero to do?
Weren't clients sold these bundled tranches via their ML FA? No offense, but ML was always rolling out new issues that paid more comission than safer secondary market alternatives. I understand not every FA was involved but many clients were hammered, as is the case at every major now.And I’ve sold a ton of American Funds to clients who were subsequently hammered in the meltdown. That’s not going to bring down Jones, though.
Touche, but those A-shares are marketable. Many client who owned these CDOs etc couldn’t divest them at all…if they were worth anything. I agree equity declines aren’t going to bring down Jones or any other firm. Your point about these decisions being made be a few people is spot on, and it happened in the investment bank.
I don't blame the advisors, anymore than I would for equity declines...but they do have some responsibilty as to what they invest their clients money in...especially if it isn't transparent. Crap shoot. That's not what we get paid to do... Remeber when ML decided to become a growth shop 9 years too late. ML Focus 20 anyone. Certainly, all firm have made mistakes. Obviously.But Jones didn’t put the American Funds portfolios together, leverage them to the hilt, then sell them to their own clients.
You're missing the point, which is that Merrill did this to themselves. THEY created the leveraged assets that THEY sold to THEIR clients. In your American Funds example the company who created the product is different than the company that sold the product. Thus one of the reasons EDJ doesn't do their own mutual funds and why companies like Merrill got out of the fund business years ago. When you create the products that you sell, you're basically on the hook twice. Once because you've got to turn a profit on those assets, and two your advisors sell them to clients who may take you to arbitration someday.It is one thing if people go out and buy some piece of crap on there own and another if you have someone who is advising you to do it!
Most professionals would not give such poor advice.I have been a rep for over 12 years and never sold a CDO. I was never comfortable with them. When I was going through my CFP classes, the instructor tried to explain them and it was very confusing to the whole class. Therefore, I stayed away. <?: prefix = o ns = "urn:schemas-microsoft-com:office:office" />
I have never worked at a wirehouse so I never had to sell the garbage they where pushing.
I have ACATed some in over the years.
[quote=Greenbacks] It is one thing if people go out and buy some piece of crap on there own and another if you have someone who is advising you to do it!
Most professionals would not give such poor advice.
<P =Msonormal style=“MARGIN: 0in 1.5pt 0.75pt”>I have been a rep for over 12 years and never sold a CDO. I was never comfortable with them. When I was going through my CFP classes, the instructor tried to explain them and it was very confusing to the whole class. Therefore, I stayed away. <?: prefix = o ns = “urn:schemas-microsoft-com:office:office” /><o:p></o:p>
<P =Msonormal style=“MARGIN: 0.75pt 1.5pt 0pt”> I have never worked at a wirehouse so I never had to sell the garbage they where pushing.
<P =Msonormal style=“MARGIN: 0.75pt 1.5pt 0pt”> I have ACATed some in over the years. <o:p></o:p><o:p> </o:p> [/quote]
We opened up a ML office in a small town in Sept. 07, leaving AG Edwards. Last fall we recruited over of the Smith Barney FA's and their office closed (minus 2 rookies). Our office is growing and our clients have come to us during all this crap. It is funny to hear people talk on the board about the destruction of the firm, when I am seeing, firsthand strong growth of a office and net new assets and annuitized assets flowing in. If you want to PM me to discuss, please feel free-but sometimes we think too much about this. Some of our competition thinks about it, while we keep bringing in the business. I am sure they are scratching their heads on this.
FYI, I started at EDJ, then AGE, now at ML after 19 years.I have been doing this for 23 years. During those years I have produced about 25-30 million in production. Sometimes on this blog there is an attitude that regionals or independents are BETTER than wirehouses. I believe each FA should select a work environment that let’s him or her best serve his/her clients effectivley. There are advantages and disadvantages to each channel.
I have never seen individual client sold a CDO, CLO or the old IO and PO products. I have seen clients sold GNMA and 1st traunch CMO products.
The problems at the firms that lost a lot of money was greed and lack of risk controls. That is why the CDO losses are at the firm level not the individual investor level.
The individual FA’s at ML did not create the issues that put ML under. Most of the FA’s that I have met at ML are honest, hard working and client focused.
I have been doing this for 23 years. During those years I have produced about 25-30 million in production. Sometimes on this blog there is an attitude that regionals or independents are BETTER than wirehouses. I believe each FA should select a work environment that let’s him or her best serve his/her clients effectivley. There are advantages and disadvantages to each channel.
I have never seen individual client sold a CDO, CLO or the old IO and PO products. I have seen clients sold GNMA and 1st traunch CMO products.
The problems at the firms that lost a lot of money was greed and lack of risk controls. That is why the CDO losses are at the firm level not the individual investor level.
The individual FA’s at ML did not create the issues that put ML under. Most of the FA’s that I have met at ML are honest, hard working and client focused.
Secretkowledge,
I believe that every FA has to choose a firm/model that is best for their clients and themselves. There is no such thing as "the absolutely right place to be" for all FAs. Not every FA will thrive and be comfortable in the same enviroment/model. I also agree that the firms that lost alot of money lost because of greed and lack of risk controls. I've also seen some FA's make bad choices. There are some FA's who really don't understand the business. I use to work with a FA who did sell CDO's to most of his clients. Sometimes he traded out of them, sometimes he rolled them....At any rate he concentrated too much of his business in that strategy. Surprising, he is still in the business. He recently went to Oppenheimer. I also currently work with some FA's who really don't do their due diligence when making recommendations to clients--a couple of them are now facing a few angry clients and complaints. I'm very sorry for the FA's at ML/SB. They ,as so many others, have been betrayed by the individuals at the firms who made decisions that resulted in unprecedented write-downs, bad will, etc., And even though these decisions were made at the firm level, it has affected everyone down the line. I know of some FAs who have had equity pulled out because of all the non-sense that has occurred in the past year--even though they didn't do anything improper with the client. Trust and reputation are everything in this business. There have been alot of changes in the past year, and I think there will be more. Let's just hope that with the changes that come are changes that will be beneficial to all----although I have been in this business a long time, and I have found that changes a firm makes usually primarily benefits the firm.[quote=rocky]
We opened up a ML office in a small town in Sept. 07, leaving AG Edwards. Last fall we recruited over of the Smith Barney FA's and their office closed (minus 2 rookies). Our office is growing and our clients have come to us during all this crap. It is funny to hear people talk on the board about the destruction of the firm, when I am seeing, firsthand strong growth of a office and net new assets and annuitized assets flowing in. If you want to PM me to discuss, please feel free-but sometimes we think too much about this. Some of our competition thinks about it, while we keep bringing in the business. I am sure they are scratching their heads on this.
FYI, I started at EDJ, then AGE, now at ML after 19 years.[/quote] You don't work at ML. ML doesn't exist. You work for BAC. You moved for a check I suppose. Just sayin' FWIW. Best wishes to you. 95% of your productivity has very little to do with where you are firmwise.[quote=Behavioral_FA][quote=rocky]
We opened up a ML office in a small town in Sept. 07, leaving AG Edwards. Last fall we recruited over of the Smith Barney FA's and their office closed (minus 2 rookies). Our office is growing and our clients have come to us during all this crap. It is funny to hear people talk on the board about the destruction of the firm, when I am seeing, firsthand strong growth of a office and net new assets and annuitized assets flowing in. If you want to PM me to discuss, please feel free-but sometimes we think too much about this. Some of our competition thinks about it, while we keep bringing in the business. I am sure they are scratching their heads on this.
FYI, I started at EDJ, then AGE, now at ML after 19 years.[/quote] You don't work at ML. ML doesn't exist. You work for BAC. You moved for a check I suppose. Just sayin' FWIW. Best wishes to you. 95% of your productivity has very little to do with where you are firmwise.[/quote] I did receive a check for moving and starting the office, but you can see I have been with EDJ and AGE that do not pay up front, so it was my first move where there was a transition package. I was the manager at AGE and I would have received a check as well for not only staying but trying to keep my FA's to stay with the new firm-Wachovia. Assuming I moved for a check would be like me assuming you are a low level producer who could not get offered a check, and I won't do that to you. So please do not do that to me. If you would like to know the reason for my move, you can PM me. Thanks for wishing me well, but my productivity and success has very little to do with well wishes.The only point I was making is the fact that you can do business anywhere...firm has little to do with it. It was actually in support of your NNA and NNUA claim. Although, I will say some firms do a better job of marketing to different investor market segments. I understand comp at both firms fairly well. They are about the same now if you are a top 25%er and LOS 5 plus...give or take a few bucks overall. Plenty to sell from both firms, and about the same investment menu. ML gets the nod on technology and HNW servicing though.
Although, you are a big winner on the BM comp. because the new WFC comp for BMs isn't what it once was...you probably already knew this though. ML as it once operated is done. I spent the better part of a decade there. There are tons of talented people all over that place. I have many friends that stayed and plenty that left. In the end, it won't really matter because they ALL will do well because they are pros. I am sure you will be successful along with your clients. If I seemd a little harsh...my apology if I offended you.Tiffany's and Wal-mart would never work.
To that end, BOA will most likely be BOA again, and ML will be absorbed up in pieces by Ameriprise.Funny you mentioned AMP. I’ve heard rumors about AMP raising another $B or 2 in capital to buy a ‘big’ name wire firm. It’s either UBS, a piece of UBS or ML. AMP has $7B in cash as of last week. They could pull it off and I don’t know another firm who could and would want to buy either. Very interesting at least. Call your local AMP FVP and he’s likely to say he or she think’s they’ll be ruling over mega ML teams soon. Funny cause it’s not funny at all. Can it happen? Yep! There are some freakin’ big players from the former HRBFS now reporting up to AMP dopes all over the place. When was that… late 08’???
If you do not mind me asking, how do you go about opening a office in small town. I am interested in moving from the mid west to my hometown but do not want to travel to NYC. Is it possible for me to open, and manage a new office for Merrill assuming I have all the qualifications?
I do not know your situation, but if you PM me with more information, I may be able to direct you to the proper people who could answer your question... Good LuckIf you do not mind me asking, how do you go about opening a office in small town. I am interested in moving from the mid west to my hometown but do not want to travel to NYC. Is it possible for me to open, and manage a new office for Merrill assuming I have all the qualifications?