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Putting a bit more BofA in Merrill Lynch

Eyeing new growth opportunities, Bank of America is taking more steps to break down barriers between bank and wirehouse units through training programs, compensation plans and technology investments.

And the company is looking to its more than 14,000 Merrill Lynch financial advisors to help make it happen.

“Our advisors are in a very unique and powerful position,” Andy Sieg, head of Merrill Lynch wealth management, said at the 2018 Barclays Financial Services Conference.

As an example of where the firm has room to grow, Sieg noted that Merrill Lynch clients have about $200 billion in deposit balances at other banks. In Bank of America’s wealth management unit, which includes U.S. Trust, two out of every three clients do not have mortgages with the bank, and three out of five don’t have a Bank of America credit card.

Exterior of Bank of America Merrill Lynch building.

In 2017, Merrill Lynch and U.S. Trust were able to refer 77,000 clients to Bank of America’s other businesses, according to Sieg. But if advisors respond to changes made to the firm’s compensation plan, those numbers will not remain stagnant.

Under the current pay plan, brokers who fail to refer at least two clients to other channels of Bank of America face cash grid reductions that could rise to 2%, according to the firm. (The referral does not have to result in business)

Even as more clients are referred to other company businesses, new advisors themselves increasingly come from a banking background.

Many Merrill recruits are from Bank of America branches, consumer bank employees moving to financial advisor roles in financial centers before migrating to the Merrill Lynch training program, according to Sieg.

While the firm did not provide numbers on how many wirehouse advisors had taken this route, Jeff Markham, a division executive at Merrill Lynch, says the number is significant.

“It is more than ever before, and it is a growing part of our talent sourcing,” he says, adding that he expects a rebranded internship program to play a role in popularizing this certain career path.

In the 13-week summer program, internees learn about all the Bank of America’s businesses, not just Merrill Lynch.

“They get to spend time in the banking financial centers, the Merrill Lynch offices [and] get to hear from employees from all different parts of the firm,” says Markham.

The common training for bankers and financial advisors was combined last year. Although the development part of the training is different — for example, the banking advisors need to know the nuances of the financial centers — the two programs have “vast similarities,” according to Markham.

Technology investments are adhering to a similar philosophy.

“A lot of the big areas of focus for us continue to be how we integrate banking into the experience that [clients] have with investing,” says Kabir Sethi, head of digital wealth management at Merrill Lynch.

Sethi’s team is focused on sharing data and integrating platforms between the investing and banking sides of Bank of America.

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“It’s a priority across the board,” he says.

But not everyone shares the same enthusiasm for the changes. Some of these moves and others, such as encouraging advisors to move small accounts to the bank’s self-directed platform, have rubbed advisors the wrong way. Several brokers have left for competitors citing discontent with policy changes and what they say is increasing bureaucracy.

Still, client acquisition is up and advisor attrition has dropped, according to the wirehouse.

Household acquisition per experienced advisor is at the highest level the firm has seen in five years or more, according to Sieg. It’s is partially a reflection of compensation changes, which rewards brokers who pass certain thresholds for client acquisition.

“This is testament to the great work of our advisors,” Sieg said.

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