Bank of America called Merrill Lynch’s thundering herd of financial advisors the bank’s “crown jewel” when it acquired the brokerage back in September of 2008. And for good reason. Not only were the steady revenues and healthy profit margins on wealth management pretty attractive relative to investment banking and trading. Suddenly, the bank also had a huge field force through which to sell additional retail banking products. In the years since, a lot of ink has been devoted to the bank’s efforts to cross-sell banking products through Merrill financial advisors. Some complain about it; others say it’s great for clients. WealthManagement.com recently caught up with John Thiel, the head of U.S. Wealth Management and the Private Banking and Investment Group for Merrill Lynch Global Wealth Management, to talk about cross-selling as well as the impact a universal fiduciary standard would have on the firm and the knotty problem of training the next generation of advisors.   

 
WealthManagement.com: There has been a lot of press about Bank of America’s attempt to sell banking products to Merrill Lynch clients. Is this working? I understand that Bank of America also wants more collaboration between the bank and the advisor force. What shape has this taken?

JT: Simply put, our advisors want to be able to do more for their clients, to deliver the best for their clients. Our clients want this too. And I’ve always been an advocate of what clients want.

I think of it this way:  With my own financial advisor I have a really talented person – there’s trust there as well as extraordinary service.  Why do clients want to do more with their advisor? Because where else in their lives do they have this kind of relationship?

If I want to get a mortgage, want to borrow money, or need estate planning, I can get all of that here. I don’t want to work with four or five different providers and, from what we hear every day, our clients don’t either.

Merrill Lynch started in the banking industry in the late 70s and early 80s with a cash management account. We knew the competition was moving from investment management to wealth management and, as we have with most other industry shifts, we were determined to lead the way. We knew then that our advisors wanted to expand their relationships with clients to cover both sides of the balance sheet—assets and liabilities. If you look today at our top competitors and beyond, everybody realizes that you have to manage the total relationship. Everybody wants to be that person clients come to when they have a financial need in their lives. This is where the game is and the game is there because of client need.

For years now, the collaboration between our advisors and the company’s banking specialists has centered on client need. Our advisors have access to hundreds wealth management banking specialists across the country, and their highest priority is partnering with our advisors to create the best banking solutions for their clients.

If we are to continue to be the industry leader in delivering on our clients’ expectations, and to be seen as a true goals-based wealth management firm, we need to provide comprehensive wealth management, not just investment management.

The opportunity is tremendous.  Hundreds of billions of dollars in deposits, mortgages and loans are needed by our clients. We are also seeing clients transact well over 500,000 times a month with us through ATMs alone. They love the convenience.

Nevertheless, until now our industry has remained focused primarily on investment management. As evidence, research tells us that financial advisors typically control the majority of their client’s assets, yet when we broaden our view to wealth management, and also look at banking needs, advisors control less than half of what their clients’ bank and even less of what they borrow. This represents a phenomenal opportunity for a firm that can truly deliver world-class products and solutions holistically.

WealthManagement.com: If a uniform fiduciary standard for all brokers and financial advisors who provide retail advice is implemented sometime in the next year, are there certain kinds of services or products that Merrill advisors would stop offering?

JT: Actually, no, the opposite is true.  We are continuing to strengthen and enhance our value proposition for clients.  For example, a year ago we began a national roll out of what we call the Optimal Practice Model, which is gaining heavy traction among our advisors. OPM is geared toward developing the core competencies that we want each advisor to have. It is about recognizing that the industry is in a period of change and moving toward a single standard – leaning toward fiduciary. We are not about to wait for the rules to be written. As we go through this change, some areas of our business will naturally need to evolve, though all things we believe are part of the underlying value of our advisor-led model.

At the heart of the matter, we’re asking our advisors to embrace the spirit of fiduciary, which, like the founding principle of our culture, is that the client comes first. We will provide plain language and transparent disclosures, and we will advocate for client choice and deliver products and services in ways that clients want to receive them, with the focus on prioritizing and achieving their goals.  We’re going through that transformation with our advisors today, partnering with them to help them shift their practices to where they’ll need to be a year from now, and five years from now.

WealthManagement.com: Training has long been a thorn in the brokerage industry’s side with its abysmal long-term success rate. But now that the average age of an FA is in the 50s, and recruiting experienced talent is more expensive than ever, training well has become essential. Has Merrill Lynch devised a formula that works? Has it made any important tweaks in the ways that it trains advisors in the past year or two? Has the success rate picked up?

John Thiel: For the last few years, we’ve made significant investments in improving what has long been the industry’s leading advisor training program.

Last year, we grew our advisor force by nearly 10 percent. The majority of that growth was driven by our culture, which leads us to hire, train and develop the next generation of advisors, and then to pair them up with our more experienced advisors and advisor teams, so they can learn from the best. We have formal mentoring programs everywhere and we are seeing a consistency in delivery that is boosting overall success. We’ve also put more resources into how we train, including adding components around behavioral finance.

If you look out across our nearly 17,000 advisors today, you’ll see that 80 percent of them have only maintained their license and registration with Merrill Lynch. What does this tell us? It tells us that our advisors start and grow with us, and that they recognize that Merrill Lynch is the best place to serve their clients.