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Industry Spotlight > Wirehouse Firms

What to Make of Merrill's Reorg, New Ads

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One month after telling its “thundering herd” of advisors that it plans to consider “options” for at least some clients who might benefit from commissions in retirement accounts, Merrill Lynch has restructured its wealth management organization and rolled out commercials to boost its advisor-client relations.

In a recent memo, Andy Sieg, head of Merrill Lynch Wealth Management, explained to the group’s 15,000-plus registered reps that it is reducing its business structure from 10 divisions to six. Sieg took the reins from John Thiel on Jan. 1.

Is there any relationship between Merrill’s shifting position on the Department of Labor’s now-delayed new fiduciary standard and these moves?

“There’s a new guy in charge,” said recruiter Danny Sarch of Leitner Sarch Consultants. “It’s more a story if they don’t do a reorganization. In other words, it’s expected.”

According to industry consultant Chip Roame, head of Tiburon Strategic Advisors, “I think the bigger message here is in [Merrill’s] self-admitted need to streamline and boost productivity. The wirehouses feel bloated to me, with dozens of executives holdings senior-sounding titles.”

In addition, Merrill and its wirehouse rivals continue to push for more productivity from their financial advisors — not on adding or recruiting more advisors, but raising average fees and commissions. “More productivity seems to be the repetitive message,” Roame said.

Merrill Lynch’s total advisor force had average yearly fees and commissions of $983,000 as of Dec. 31, 2016, while its veteran FAs had annual production of $1.25 million. This compares with average production of $1.01 million at Morgan Stanley and $1.17 million at UBS Americas.

Advisor Input

“It’s been great to have the opportunity to meet with more than 3,000 of you at town halls in a dozen cities so far this year,” Sieg explained in a recent memo. “I called it a ‘listening tour.’ I wanted to hear directly from you what we could do to accelerate growth, among existing clients and with new ones.”

According to Sieg, the issue that has been top of mind for many advisors is capacity — or “the loss of it” — and how the firm can “free up time and energy better spent on client acquisition or in the quality service of clients.”

By shrinking the number of divisions, Merrill aims “to make the organization feel like a smaller, more tightly integrated firm,” he says. The executives in charge of these six groups are as follows:

  • Northeast, Bill Lorenz
  • Mid-Atlantic, Lindsay DeNardo Hans
  • Southeast, Eric Schimpf
  • Midwest, Paul Lambert
  • Texas-Mountain South, Vince Fertitta, and
  • West, Jeff Markham

“We’re going to focus on responsible growth by bringing the firm closer to you and the local markets and by leveraging the unique resources of Bank of America and Merrill Lynch for all of our clients’ financial needs,” Sieg explained.

Wealth Ads

Merrill Lynch also launched a nationwide advertising campaign this spring with a focus on the client-advisor relationship. The first ad in the print, digital and radio series has the tag line, “We’re bullish on the future — yours.”

The ad describes a world undergoing deep shifts in technology, politics and demographics. “It … requires a different method of investing: one that doesn’t focus first on stocks and markets, but on your life and priorities,” the campaign states.

“Through honest conversations, we’ll find out what you want your future to look like, and develop a strategy together to help make it happen … You don’t meet clients’ future goals by living in the past,” it concludes. “So we’re staying focused on the future. Yours.”

“I like the focus of identifying all the change,” said Roame. “I think prospects/clients feel that change, and it helps to say we feel it too.”

Another plus, according to the consultant, is the ad’s emphasis on clients’ lives and priorities over stocks and markets. “I would add that this identification is long overdue, but I like it,” he said.

For his part, Sarch views the ads as not hurting and probably helping “to make the brand better for the investing public,” he says. “And they can be seen as positive … for those who want the Merrill Lynch brand to resonate more” with current and potential clients.

The ads come at a bit of an awkward time for the wirehouse, the recruiter says, since it has pulled back a bit from its fee-only approach.

“Merrill Lynch was way out in front and went very public” with a pro-fiduciary approach to the new (and now delayed) Department of Labor standard, Sarch says. But with perhaps pushback from some advisors and clients alike who want to keep commissions, the firm looks like it has opted to “back paddle to some degree.”

Bank of America-Merrill Lynch is set to release its first-quarter earnings on Tuesday, which will give observers a sense of how the firm is doing in terms of advisor productivity, recruiting and fee-only assets. 


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