Merrill Lynch plans to grow primarily by investing in current advisors and hiring rookies, said Merrill Lynch president of Global Wealth and Investment Management Sallie Krawcheck on Tuesday. Her words come as recruiting bonuses are at an all time high for top Wall Street talent. In 2009, there was a frenzy of advisors switching from one Wall Street wirehouse firm to another and to independent broker dealers and RIAs. But the firm switching seems to have quieted down some so far this year. Merrill’s advisor headcount stood steady at 16,000 in the first quarter.
“It’s nice to see some of the Merry-go-round settle down,” said Krawcheck on a conference call following the release of Bank of America Merrill Lynch’s Affluent Insights Quarterly. “Clients value stability, a long-term relationship with an advisor.” She continued, “We’re making investments in platform, technology and capabilities. The growth we look to deliver is from existing financial advisors rather than from new advisors,” she said. “As we look to grow the force, we really are looking to build on one of the great underpinnings of Merrill culture: bringing people in who are early in their career and having them grow up here. We’ll continue to bring in people from other firms, but the preponderance is investing behind for our existing advisors and bringing in people who are early in their careers.”
Krawcheck said one of the most interesting findings of the Affluent Insights Quarterly report is perhaps that affluent Americans are happy with the work their financial advisors are doing. She called this finding non-consensus. Around 44 percent of the survey respondents said they work with a financial advisors, and of those, about 81 percent are satisfied with the help they get. Maybe that’s in part because they’re getting more attention from their advisors than before. Some 13 percent of respondents said they “engage” with their financial advisor once a week, up from 8 percent six months ago. Meanwhile, 75 percent engage with their financial advisors on a quarterly basis and 41 percent do so on a monthly basis, according to the report.
Another interesting highlight from the report is that a greater proportion of women than men express concern about financial issues, often 10 to 15 percent more. Of course, it may be the nature of the beast—women, it could be said, tend to worry more. But they are also getting more involved in family financial planning than they were in the past, said Lyle LaMothe, head of Bank of America’s U.S. wealth management, and this may impact the financial advisory relationship.
“I think there will be an improving balance when an advisor is involved in a relationship with a couple,” he said. “Historically the conversation has been more dominated by the male side of the relationship, and yet what we know from a common knowledge standpoint is that women do live longer statistically than men. This particular side of the equation seems to be moving from passive to active, improving the degree of ownership and degree of interest in future outcomes.”
For example, the rising costs of healthcare is the number one concern for women, with 70 percent of women expressing worry about it versus 54 percent of men, according to the survey results. Meanwhile, 65 percent of women are worried about ensuring their assets will last throughout their lifetime, versus 57 percent of men. And 55 percent of women were worried about being able to afford the lifestyle they want in retirement, versus 46 percent of men.
The survey also found that almost a third of affluent investors are caring for both aging parents and adult children, a group that has been nicknamed the Sandwich Generation. Almost 45 percent of those in this so-called Sandwich Generation are making important lifestyle sacrifices as a result of their difficult family responsibilities, and 44 percent are cutting back on personal luxuries, the report found. Only 26 percent are saving less for retirement, and 12 percent contributing less to their children’s college education. These tough choices are ones that financial advisors can help clients with, Bank of America Merrill Lynch executives said on the call.
