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Merrill wants to grow the thundering herd, and then some

NAPLES, Fla. — Wealth management may be grappling with a technology-driven evolution, but Merrill Lynch sees room for investment in a decidedly non-digital area: human talent.

“The essence of the business is people. The ability to understand what matters to clients — there is no technology today that can deliver that level of insight in all of its dimensions,” President Andy Sieg said in an interview with On Wall Street on the sidelines of SIFMA’s Private Client Conference.

The company has plans to add more Merrill Edge advisors, more traditional financial advisors and more managers. The vogue for cultivating human talent extends to the firm’s most popular training program for experienced advisors. Entitled Advisor as CEO, it isn’t focused on financials, but rather managing one’s team members.

To be sure, the firm has recently upped its technology focus, adding new apps, tools and a robo advisor. But the advisor's role is "not going away, it’s expanding over time,” Sieg says.

SIFMA Private Client Conference Andy Sieg, president of Merrill Lynch Wealth Management, 2019 photo

Merrill Lynch, which has approximately 3,500 trainees, has been growing its advisor headcount at about 1% per year, according to Sieg. This comes at a time when the industry has been challenged by a wave of advisor retirements.

Parent company Bank of America, meanwhile, has been building bridges between its Merrill Edge service and its traditional wealth management offering. Soon, Merrill Lynch offices will host an additional 300 financial solutions advisors (25 of whom have already been hired). This is in addition to the roughly 3,000 FSAs who work at Merrill Edge, some of whom are situated in Bank of America branches.

“The clients they serve tend to be younger, mass affluent, and they tend to be very connected to the consumer bank,” Sieg says.

Placing them within Merrill Lynch offices will strengthen the relationship between business units. Already, Merrill Edge has made 40,000 referrals back to Merrill Lynch, according to Sieg.

“We believe we’ll personalize the Edge connection. It’ll facilitate growth going forward because, as Merrill Lynch advisors win new clients and those clients have kids with more foundational needs, the FSAs will be relevant to those clients,” Sieg says.

They “need to be thinking about guaranteed income streams” because there’s “not a lot of time for recovery,” an expert writes.
November 15
Pam Kelley is the Product Line Manager for Wolters Kluwer Tax and Accounting workflow solutions, including CCH Axcess Practice, CCH Axcess Workstream CCH Axcess iQ and CCH ProSystem fx Practice Management. She has been with Wolters Kluwer for almost 20 years, first as a business analyst, then product owner, before moving to product management earlier this year. Prior to working for Wolters Kluwer, Pam’s background includes working as Development Manager for another time, billing & workflow solution provider as well as Accounting Manager in private accounting.
November 15
Damon Russel is the Product Line Manager at Wolters Kluwer responsible for driving strategic development, sales and retention, and portfolio management of document management and client collaboration solutions for Tax and Accounting Professionals. He has over 10 years of experience delivering enterprise software solutions for Wolters Kluwer customers and their clients around the globe.
November 15

The management ranks at Merrill Lynch are also set to expand beyond its 102 market executives. Sieg pointed to one such executive who was overstretched with responsibility for operations in Nashville and Memphis, Tennessee, as well as Little Rock, Arkansas. The firm split the region in two, hiring a second executive to be based in Memphis.

“That is investment for us, but we believe it’s powerful because we’ll have a strong leader in Nashville, a fast growing market, and we’ll have a strong leader in Memphis,” Sieg says.

Merrill Lynch is evaluating where to create new markets, also known as complexes in other firms, with an eye to cities where wealth creation is happening at a fast clip. In other words, the firm wants to go to beyond traditional enclaves of wealth to where new millionaires may be cropping up.

The firm also intends to hire 75 managers tasked with overseeing trainees and who will be based in the field. Previously, market executives were responsible for that oversight in addition to managing advisors. A single executive could be tasked with overseeing 150 financial advisors plus 20 to 40 trainees, making it difficult to provide personalized coaching and training.

Merrill, which had 14,796 advisors as of Dec. 31, 2018, has grown advisor headcount and has experienced lower levels of attrition in recent years. Rivals UBS and Morgan Stanley have also had low attrition rates, though Wells Fargo has seen headcount tick down since a fake accounts scandal and other regulatory issues rocked the bank in recent years.

Advisor productivity is on the rise at Merrill, increasing by 5% year-over-year to reach $1.05 million for the fourth quarter. Parent, Bank of America, reports quarterly earnings next week

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