Merrill Lynch: Still Wirehouse Queen

In the past year, Merrill Lynch has spent heavily on an ongoing upgrade of its wealth management technology platform, rolled out a number of new alternative investments, created a structured products team and redesigned its account statements. It has replaced the respected-but-unpopular James Gorman with the well-liked Robert McCann as head of its private client group. And it continues to sharpen its focus on creating comprehensive financial solutions for the very wealthy.

Merrill reps like what they see. This year, the firm kept top honors among wirehouses in the Broker Report Card surveys, and beat its own overall score from last year — coming in at 8.1, up from 7.7 in 2004. (A.G. Edwards and Edward Jones continue to win higher overall grades than Merrill.) The firm outranked itself versus last year in every single category and subcategory measured by the Broker Report Card survey.

Merrill is ramping up service for its reps, in part because it wants more from them. McCann told The New York Times in an October interview that Stanley O'Neal wants the group to contribute half of Merrill Lynch's overall revenues, up from a third today. (Merrill wouldn't confirm this point, saying McCann just made an “off-the-cuff” remark, but there's no denying the firm is looking to the unit for growth.)

Reps reserved their highest praise for Merrill technology: The firm's “quote and information system” scored a 9.0, up from 8.3 last year. It's no wonder. Merrill is spending $1 billion to upgrade its wealth management technology platform over a five-year period that started in 2003. The new workstation is “awesome,” says one rep based in the midwest. “It offers a lot more features, it has a dual screen, it's easier to access information.” Merrill reps also gave a 9.0 score to “freedom from pressure to sell certain products,” reflecting the firm's continued shift towards wealth management and away from product pushing. Last year, branch managers gently prodded brokers to sell banking products from Merrill's new Beyond Banking program, according to brokers, but they've stopped doing that.

Overall, the grade for “support” took a big step up — rising to 8.0 from 7.5 last year. Reps say it's easy to get the help they need and find the information they want. “I think Merrill is always on the cutting edge in terms of products and services they offer. And they do a great job. They consistently survey clients — so they do a lot of the work for us,” says an east coast rep. The firm's new account statements, which were redesigned this year to display all of an investor's accounts in one place, won top honors from Dalbar. “[The forms] show you a better picture of what you own — give you a snapshot of performance and allocation,” says another rep.

Merrill reps are also pleased with the firm's “strategic focus,” as well as its continued efforts to diversify its product mix. “There are a lot of new products, from closed-end funds, to alternative investments, to commodities,” says one New-York-based rep. “And the people putting out the new products get behind them,” he says.

Merrill reps' biggest complaint remains the “quantity of sales assistants.” Lack of coordination between different departments at Merrill was another weakness cited by brokers. One east coast-based rep says he'd like to see a better flow of mutual referrals between the private client group and the investment-banking group. Still, the firm established a special committee to find a solution about six months ago, says the rep. These days, Merrill isn't letting anything slip through the cracks.