Who owns the client ... the brokerage firm or the broker?

Merrill Lynch retail chief James Gorman says the numbers answer that question quite clearly. “The experience is that when brokers leave they take 65% of their book,” Gorman told RR at a gathering of reporters in the firm’s offices at 717 Fifth Ave. in Manhattan this morning.

So retaining good brokers pays off? “Sure,” he said. “Merrill has the largest number of wealthy and affluent clients in the country, so clearly, investing in the financial adviser, building their competencies and providing resources is a very powerful tool.”

Asked whether Merrill would stop freezing client accounts when brokers leave the firm and clients want to follow them, Gorman reiterated a statement the firm has previously made, “Ultimately, you do what the client wants,” he said.

Gorman was named president of Merrill’s U.S. Private Client Group (USPCG) Sept. 20.

At the media briefing this morning he outlined some of his priorities for the firm’s 15,000 retail brokers, including “more of the same” emphasis on wealth management for affluent individuals, overhauling broker training programs and broadening the array of products and services they offer--especially banking services.

Gorman also announced that Bob Mulholland was promoted to fill his former spot as head of the firm’s Client Relationship Group. Mulholland was previously director of the Advisory Division, one of three units within Merrill’s USPCG.

As far as the firm’s new broker compensation package is concerned, Gorman said details would be delivered to regional managers in the form of a video some time over the next few months. He said the new package would be “very simple” and would reward brokers who are doing lots of planning, fee business and selling a broader array of financial products, including insurance and variable annuities.

Gorman told RR in September that the compensation package, contrary to popular belief among brokers, would not emphasize net new assets brokers bring into the firm. “It is a piece of the manager’s compensation, because at the end of the day they should be growing the business,” he told RR.

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