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Suit Up! Merrill Lynch Boot Camp Preps Clients

In a wood-paneled classroom at the Wharton School, about 30 wealthy people waited patiently, making small talk with a neighboring person and drinking bottled water. Notepads and slideshow printouts lay before them.

As class began, they turned to their teacher, Stacy Allred, as she lectured on best practices of stewarding family wealth. The group was attending a financial education boot camp run by Merrill Lynch’s elite Private Banking & Investment Group, which caters to clients with $10 million or more in assets. She noted that many families see their wealth quickly dissipate after three generations. The culprit? Communication breakdowns between family members and inadequately prepared heirs.

"It’s like giving the keys of the Ferrari without driving lessons," she said.

Education programs like this satisfy the needs of clients aiming to ensure their family’s wealth lasts beyond the current generation and is meaningful to future inheritors. They also give advisors and their firms a leg up in the highly competitive market for ultrawealthy clients.

Research firm Cerulli Associates estimates there are more than 800,000 high-net-worth (Cerulli measures high-net-worth as $5 million or more in investable assets) and ultrahigh-net-worth ($20 million or more) households in the United States. Winning or losing one of these clients can greatly affect an advisor’s book.

About three-quarters of wealthy people created their own fortunes, according to a U.S. Trust survey of clients with $3 million or more in investable assets. "A lot of our clients are first-generation wealth—it’s not inherited," says Merrill private wealth advisor Melissa Corrado Harrison, who has sent several clients to the firm’s boot camps.


The boot camps help allay the fears of these wealth creators and their heirs, according to instructors and Merrill advisors. The program, launched in 2007, has expanded to 10 annual camps aimed at women, wealth creators and inheritors; last year the firm launched a specialized camp for small business owners. About 25 people attend each session, held at UCLA, the Wharton School of the University of Pennsylvania and the University of Chicago, staffed by instructors from the schools in addition to Merrill staff. Attendees are nominated by advisors from Merrill’s Private Banking & Investment Group; they don’t pay a tuition fee. Merrill management selects attendees based on their needs.

Each session has a mixture of what Allred says is the “secret sauce,” seminars that build financial, human, intellectual and emotional capital. Topics include macroeconomics, philanthropy, family dynamics, behavioral science, asset allocation and basic portfolio theory. But each camp is tailored to the needs of the attendees.

"The agenda needs to address all levels, whether you’re an MBA or art major — we have to address both the left and right brain," says Jenna Gatto, a financial boot camp program leader and member of Merrill Lynch’s Ultra High Net Worth Client Solutions & Segments team.

Christopher Geczy, a Wharton finance professor who has been part of the boot camp series since its inception, adjusts the content of his portfolio theory classes depending on the makeup of the audience. For instance, he spends less time on wealth creation with millennial inheritors than he does with their baby boomer parents.

Still, he says, the ultimate goal remains the same: to arm participants with vocabularies and tools to better communicate. "How do you communicate with someone who’s made a billion dollars and runs the family like a business? It’s a very daunting thing for some kids," he says. "It’s also challenging for the wealth creator. It’s about what it means to be a family."

Instructors and participants alike say the group structure benefits participants who rarely have the opportunity to have frank conversations about the wealth-related problems their families have encountered.

"If you're at a golf course or yacht club, you don't necessarily talk about your successes and failures. Here you hear, 'Oh we had this challenge in our family. This is how we dealt with it," says Gezcy.

Merrill client Jodi Johnson attended the UCLA boot camp for women in 2009, after having sold her 750-employee company. She sent her two oldest sons to boot camp in 2010.

"My oldest son really enjoyed having a conversation with someone other than his parents about prenuptial agreements — what they are, why they’re needed, how you bring them up," she says, noting that she and her sons all appreciated being around others who’d had similar experiences related to acquiring new wealth.

Attending boot camp also changed the way she approached her wealth, Johnson says. She and her husband began having their kids develop proposals for charitable donations they fund, for instance. "It’s helped us think about how we help them understand and pass on our values and understand their own as well," she says. "We want to be one of those families that three generations from now still has something to talk about and share with grandchildren and great-grandchildren.”


Many boot camp classes help open the lines of communication between generations. Michael Liersch, head of behavioral finance at Merrill Lynch, teaches participants about decision making, family practices and facilitating those processes to make it easier for all family members to be involved.

"Many individuals think, 'I don’t want to talk to my kids about money because I don’t want my family to be all about money,'" he says. "There’s good intent behind that. But it also means there isn’t knowledge sharing, and the younger generation does not learn from their parents’ best practices."

Liersch has attendees fill out a 27-question assessment to determine how much importance they place on things like family time and passing on key values. Doing the assessment enables them to articulate a perspective, he says. And while those topics may seem like lighter fare than portfolio theory, the long-term impact of better communication on the family’s wealth can be dramatic.

"We are trying to prepare the next generation to receive the wealth and prepare the senior generation to have those conversations," says Allred.


Winning over wealthy clients is no easy task. For the more than 150 advisor teams in Merrill’s Private Banking & Investment Group, the boot camps are a critical asset when trying to seal the deal.

"At my level, there’s no family that isn’t interviewing a couple of different firms," acknowledges Peter Rohr, a Philadelphia-based private wealth advisor with Merrill for 27 years. "This is one of the great arrows that I can pull out of my quiver."

Rohr, who has been sending his clients to the Merrill boot camp since the first one took place in Philadelphia, says they typically come back more engaged, peppering him with questions about their investments.

"That’s what you really want," he says. "You don’t want the [advisor/client] relationship to be parental. You want it to be peer-to-peer."

In particular, he highlights the benefits the camps offer the millennial children of his clients and how that benefits him as well. His greatest fear as an advisor, he explains, is that those millennials will inherit the wealth and take it elsewhere because they don’t have their parents’ years of experience working with him.

Merrill executives also see the program as an essential tool for growing the business. "This is something our clients value a great deal," says Phil Sieg, managing director of Merrill’s Ultra High Net Worth Client Solutions & Segments team. "I think if you do something meaningful for a client, in the long run that is good for business."

Rohr, on the front lines in the battle to win and retain assets, puts it more directly: "A knowledgeable client is a happy client. And a happy client is going to stay at Merrill Lynch."


Merrill isn’t alone in developing programs to assist clients with the related challenges money brings. Wells Fargo’s Abbot Downing division organizes personalized mini education camps and sessions for its clients, who have $50 million or more in assets.

Arne Boudewyn, head of the family dynamics team, provides tools and training to clients in three areas: communication strategies surrounding wealth, family governance strategies and preparation for the next generation.

Boudewyn often meets prospective clients, to show the value of what his team adds to the investment advice offered by Abbott Downing: "To compete effectively in a world of advisors for the ultra-high-net-worth client, this is a critical must-have."

Meanwhile, Zurich-based UBS offers a two-week program in Switzerland and has developed a program called Young Successors, targeted at the children of its U.S.-based wealthy clients.

The U.S. program is in its third year, lasts up to three and a half days and usually has about 30-35 participants whose average age is 27.

"We had 500 nominations for the about 30 spots. It's very competitive," says Judy Spalthoff, head of client development for UBS Financial Services.

But Merrill isn’t resting on its laurels. The firm is also launching its first alumni camp later this year to deepen its connections with its clients.

"People want to be taught, they want to learn, and I think if you fulfill that mission it’s great for the relationship," says Merrill’s Sieg.

The firm anticipates that the program will keep assets in Merrill accounts – and hopefully attract new ones, while for participants like Jodi Johnson and her sons, the camps bring hope that they can make sense and meaning out of their fortunes.

Allred says it’s one of firm’s most successful programs.

"When you’re at a private bank like this and you’re working with clients of this net worth, this is really where you add value for them,” she says. “And it’s incredibly rewarding as a firm."

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