June 14, 2021
Merrill Wealth Chairman Andy Sieg speaks at the Securities Industry and Financial Markets Association Private Client Group Conference on May 26, 2021.
Merrill Lynch Wealth Management Chairman Andy Sieg on Monday reaffirmed the company’s intention to stay out of the seasoned brokerage game, noting that he and other senior executives “don’t think it’s a good thing. formula for customers, shareholders or society as a whole “.
“One of our principles is that cultures can only be built. They cannot be bought, ”Sieg said in a virtual presentation at the Morgan Stanley US Financials Conference. “We’re going to stay focused here on building this extremely strong culture of Bank of America and Merrill Lynch as we build the consulting force of the future. “
Merrill’s decision to stay on the sidelines comes as his competition is engaged in a “very active recruiting environment right now,” Sieg said.
The growing competition has come at the expense of Merrill in some instances as the company continues to see a steady stream of exits from seasoned producers with a number of high level departures over the past year and a half, as some have expressed frustration with the growth of the business and the growing influence of the bank. Three teams with combined revenue of $ 12 million gone for a competitor Friday only.
Merrill has also seen several departures this year from its ranks of around 105 market leaders, including four who left in a week around the Memorial Day holidays. The releases followed a year in which the bonus pool for market managers was reduced by about 30%.
Sieg did not discuss attrition rates, which officials say are fairly constant year over year at around 4% among brokers and 5% to 10% among executives.
But touting a local force’s best economy, Sieg pointed to Merrill’s declining promissory note balances, a measure of what she owes newly hired brokers on upfront repayable loans. Loan balances plunged nearly 47% to $ 588 million at the end of 2020, from $ 1.1 billion at the end of 2017, when Merrill halted recruiting seasoned brokers as an AdvisorHub. Previously reported.
“Most of our competitors have actually seen these loan levels increase over the last few quarters,” Sieg said without identifying any of his rivals by name. At Morgan Stanley, which relaunched its brokerage recruitment after a similar hiatus in 2017, these loans climbed back above $ 3 billion Last year.
The savings were reinvested in the advisor development training program where Merrill expects a better return on investment, Sieg said. The company unveiled a new training program two weeks ago that aims to train approximately 1,000 new advisors per year from a group of employee and banking financial solutions advisors who are already licensed with Merrill Edge.
The new program is expected to help the bank grow its workforce by about 20,000 Merrill brokers, FSAs and about 500 private bankers with “single digit” percentages without resorting to hiring experienced brokers, Sieg said.
The new 18-month counselor development program could eventually have graduation rates of up to 80%, while Merrill’s old program had been “ineffective” and often resulted in success rates of only 20% after five years. he added.
Sieg said Merrill will continue to hire through its Accelerated Growth Program, which targets newbie brokers at other companies and offers them a guaranteed annual salary to top up their grid-based payout. This structure means that the cost does not increase the initial loan balances.
Sieg reiterated that the company will also selectively hire some seasoned brokers in key markets such as Florida, but assured that Merrill “will maintain great discipline on this”, and that would be “marginal in the context of a company of 20,000 advisers.”
Of course, the redesign of training has reported a culture change, according to senior managers and consultants at Merrill who said tapping into a pool of bank-referred brokers is more like a JP Morgan model of Chase Wealth Management or a discount brokerage rather than the previous generation.
Sieg, however, extolled the virtues of the bank-brokerage combination for his core business of wealth management. Merrill has 4,400 brokers who generate over $ 1 million in annual revenue per year, down from less than 1,200 in 2009, prior to Bank of America’s acquisition of Merrill Lynch.
There are also 185 brokers generating more than $ 5 million in revenue, up from 14 in 2009, he said.
“By all analysis, this is a powerful platform to serve clients and build consulting businesses, and it’s a key part of this growth story,” said Sieg.