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Merrill Exec Expects New, Shorter Advisor Program to Quadruple Success Rate

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What You Need to Know

  • Merrill Lynch expects its new 18-month advisor training program will be more efficient and increase the advisor success rate to 80% from 20%.
  • The firm continues to focus on growing its advisor count organically rather than by recruiting many veteran brokers.
  • Merrill also plans to continue investing in technology.

Merrill Lynch’s new 18-month Advisor Development Program stands to significantly increase the success rate of the firm’s advisors, from just 20% to 80%, Andy Sieg, president of Merrill Lynch Wealth Management, told the online Morgan Stanley U.S. Financials, Payments & CRE Conference on Monday.

As part of the new program, Merrill Lynch Wealth Management will no longer let its 3,000 advisor trainees make cold calls, according to a report in the The Wall Street Journal.

Sieg also stressed on Monday that the company will continue to focus on organic advisor growth rather than the recruitment of experienced brokers.

The new training program, which is half the length of Merrill’s prior training program, is “going to be much more efficient,” he vowed.

Merrill has been running the largest advisor development program in the sector. “But when you look at that with a lens of expectations [for] 2021, it was a very inefficient program” in which “graduation rates were pretty low,” Sieg pointed out.

“Our success rate of advisors five years out is only about 20%” right now, he noted. To turn that around, the firm has “reset the program by more carefully focusing on talent coming in, having a more clear development path, more support in terms of oversight, as well as lead development, and then the right type of transition plan to become an advisor,” he explained.

“We think the success rate in this program can be pushing an 80% success rate over time,” he said, but did not specify how long he expects that to be.

“This will be overwhelmingly internal talent development, but we still maintain flexibility,” he was quick to add.

For example, when “we see early career advisors that may have started at other firms” and are already “licensed and trained [and] they look a lot like individuals that would be in the later stage of our development program, we’ll be hiring some of them and bring them over — but on a salaried program, not a traditional recruiting deal,” he explained.

There may also be “instances where we do want to have select inorganic acquisition of advisor talent [but] we would maintain great discipline around that,” he said. That could happen in a market where Merrill has a “particular need to accelerate our presence or where we see … an extraordinary level of growth happening,” he added.

For example, Merrill has mentioned that in Florida, “given what’s been happening in terms of the migration of wealth and creation of wealth … there’s a possibility there that we may look to add some teams inorganically — but that’s very limited and very marginal against the backdrop of a 20,000-advisor business,” he said.

Sieg also pointed out that, when Bank of America acquired Merrill in 2009, there were only 14 advisors at the firm who produced more than $5 million of annual commissions. That has grown to 185 today, he said. Therefore, “by any analysis, this is a powerful platform to serve clients and to build advisory businesses, and that’s a key part of this growth story,” he told viewers.

Merrill continues to expect there will be only “low, single-digit, percentage increases annually in advisor count,” he said.

Private Bank’s Advisor Strategy

In the company’s Bank of America Private Bank business, meanwhile, the strategy for advisor growth is similar, according to Katy Knox, president of BofA Private Bank.

“We’ve learned a lot over the last five years,” she said. “We’ve hired 150 advisors in the Private Bank and really what the data has shown us is exactly what Andy said: the internal hires have been really successful.”

The division’s “focus has been on our younger professionals and making sure they have the training in role development, and then overall advisor development,” she said, adding: “We’ll stay on track,” growing its current 500 advisors to 525.

The firm has “extremely strong growth prospects, not just over the quarters ahead but over the decade ahead.”

More Tech Investments Planned

“2020 was a tough year” but “the 2020s, we believe, will be a phenomenal decade for wealth management,” Sieg also said Monday. After all, “levels of wealth in the U.S. and around the world are projected to increase dramatically,” he said.

“Uncertainty is out there and so we have some conviction that clients need our help, particularly high-net-worth and ultra-high-net-worth clients, and together this really equates to a bull market for advice that we think we’re well-positioned for,” he explained.

Meanwhile, “from a digital perspective, the investments that Bank of America has been making in technology and specifically behind our wealth management business have paid off enormously,” he said. “The business has moved forward, we like to say, probably five years in terms of our progress and client uptake of our digital platforms — but we’re not letting up. The investments are going to continue.”


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