Merrill Lynch has lost several multibillion-dollar teams during the first six months of 2018, but those high-profile losses don't appear to be slowing the thundering herd.

Six of the top 10 financial advisor recruits so far this year — who managed roughly $13.2 billion in client assets — came from Merrill Lynch, according to hiring announcements and recruiting data analyzed by On Wall Street.

However, those and other departures have not had a noticeable impact on Merrill Lynch's head count. The firm, which is enjoying low attrition, recently reported its advisor ranks fell by only nine brokers from the previous quarter to land at 14,820 for the second quarter.

By comparison, Wells Fargo's head count, at 14,226 advisors, was down by 173 advisors from the previous quarter, the bank reported in its second-quarter earnings release, issued July 13.

In total, the top ten advisor teams to switch firms so far this year managed $18 billion at their former employers, according to the data. The majority went independent, moved to regional broker-dealers or went to boutique firm J.P. Morgan Securities. None went to another wirehouse.

“I think that things have gotten much busier this year than last year,” says Frank LaRosa, CEO at wealth advisor recruiting company Elite Consulting.

Regulatory uncertainties overshadowed the industry in 2017. At this time last year, advisors were waiting to see what policy changes, if any, the Department of Labor would take with regard to its fiduciary rule. The regulation was vacated by a federal appeals court earlier this year, ending a period of uncertainty for advisors, some of whom were concerned about how their firms would operate under fiduciary principles.

Of the largest teams by AUM to quit Merrill Lynch this year, most chose to go independent or head to J.P. Morgan Securities.

But while the teams might be big, the attrition is nothing out of the ordinary, says recruiter Michael Terrana.

“It’s just normal attrition," says Terrana. "I don’t see it as Merrill doing something that would provoke their advisors from leaving at this point."

LaRosa thinks these departing brokers are pursuing more sophisticated platforms and better technology for their clients, not necessarily a different culture.

However, one of the Merrill teams that went indie spoke otherwise.

“What really happened is we started to see a change and a shift from being client-focused to product-focused,” says Melissa Bouchillon, one of the five advisors of Sound View Partners, which managed $1 billion in assets at while at Merrill Lynch.

Another team member, Emerson Ham, says that management started to add layers of time-consuming compliance. Despite his team’s tenure and AUM, they had to follow all the same processes as an advisor who joined the wirehouse only a year ago.

“It just seemed to us that the business was being more and more run by regulators and by bank lawyers than by experienced people who had sat in our shoes,” Ham says.

Whatever their motivations, advisors often expend considerable time deliberating whether to move, and once they do, it all happens very quickly.

“Our experience allows us to do a pretty quick turnaround,” says Jerry Lombard, president of the private client group at Janney Montgomery Scott, which hired the $2 billion Glasgow group from Avondale Partners this year. “[It takes] generally 24 to 36 hours from the moment the financial advisor resigns until communications and paperwork are getting out to their clients.”

For Janney, this has been a big year so far — the Glasgow group was the most significant team the firm has hired since 2014. J.P. Morgan Securities has had a good year as well; four of the ten biggest recruits joined the elite wealth management unit.

Quote
“These moves ― there’s a lot of thought that goes into [them], a lot of anxiety, if you will, and you really question yourself.” - Jim Aid

Lombard says that, while a firm can try to make the transition process as pain-free as possible, it really depends on the strength of the relationships between clients and advisor.

Jim Aid, an advisor managing $900 million in assets, who moved to RBC from Wells Fargo, says he hasn’t taken a day off since his move in early June. The 12- to 14-hour days he has been working seem pretty routine by now.

“A move like this is not a ‘what the heck’ thing,” says Aid. “These moves ― there’s a lot of thought that goes into [them], a lot of anxiety, if you will, and you really question yourself.”

Many of those leaving Wells Fargo have opted to join regional brokerage firms, including Aid, who was among the biggest recruiting moves of the year thus far.

While many of the advisors who contemplate leaving Merrill struggle with whether to pull the trigger, the firm itself does not appear to be sweating the departures.

Advisor headcount has been relatively unaffected, according to the second quarter earnings report. This was also the case for Morgan Stanley and UBS as well, who have managed to slow down their attrition since leaving the Broker Protocol.

A spokeswoman at Merrill Lynch says the firm is actively recruiting advisors with three to eight years of experience.

“We believe that experienced advisors see Merrill Lynch as the brokerage firm of choice to serve their clients’ financial and life goals, and our numbers bear that out,” said the spokeswoman.

Not only has headcount been relatively unaffected, assets are up, too.

Client balances reached $2.3 trillion for the second quarter, up from $2.2 trillion for the same period a year ago, a 4.5% increase, the company reported as part of its earnings. And Bank of America’s wealth management unit, which includes Merrill Lynch and U.S. Trust, reported net income increased to $968 million from $804 million, an approximately 20% increase.

But to the advisors making a career change, it’s not about the data points.

“I think most advisors that do make a transition, what they’re looking for, and what I was looking for … is true improvement,” says Aid. “To be in an environment that just feels comfortable, [where] the energy level is high, [where] you’re surrounded by optimism.”

And anxieties aside, advisors expressed satisfaction in their decision, and said most of their clients shared the feeling.

“I remember the first couple of weeks, clients were bringing baskets of food, champagne, letters,” says Ham. “That was not something I was expecting.”

To see the biggest recruiting moves of 2018 so far, click here.

Jessica Mathews

Jessica Mathews

Jessica Mathews is a reporter for Financial Planning, On Wall Street and Bank Investment Consultant.