By Barbara Herman
Whether inclined to stay or to go, advisors owe it to their clients – and themselves – to pay attention to what’s changing at the firm.
With so much movement by top Advisors, even diehard Merrill folks, who have been the industry’s most loyal over the years, are asking: “Why are so many people moving and what am I missing by staying?”
Certainly no one wants to be the last one standing, left behind to turn out the lights, nor miss out on a life-changing new opportunity. But does the now ongoing stream of departures by top advisors send a message or even a warning that others should heed?
There was an undeniable, elevated level of frustration among big firm advisors entering 2020. The pandemic and work-from-home environment made it easier for advisors to contemplate their situation and perform due diligence. And this momentum has only accelerated in 2021 as advisors discovered that they could choose from an expanding variety of options that allow them to solve for their frustrations without sacrificing the benefits of their current firm.
Merrill advisors, both those who have moved over the past 18 months and those now seriously considering it, have also questioned the future, exposing concerns about where Bank of America is taking Merrill in the months and years ahead. In essence, those who moved saw the handwriting on the wall.
So what is happening that has provided advisors with clues to the future direction of Merrill and is leading so many to leave?
Bank of America (“BofA”) has been a patient parent over the past 10 years. However, a string of recent developments suggests that changes from the Bank are accelerating, and Merrill advisors should brace themselves for the start of a new era-one in which BofA has a more dominant voice.
While each change on its own may look relatively innocuous to a tenured advisor, when viewed together, these changes summarized below paint a picture of what BofA is planning for Merrill’s future.
Merrill, by its own admission and choice, is not recruiting experienced advisors. And advisors may not care about the fact that Merrill is only recruiting private bankers and very early tenure nontraditional hires. They may even hope that this allows Merrill to focus more on appreciating and supporting its existing advisors. But this recruiting strategy signals a focus on building a next generation of advisors whose skills and expectations for compensation and responsibilities are far different than the current experienced advisor community.
Merrill’s training program is being revamped to draw trainees from Merrill Edge and the bank channel, and to replace cold calling with bank referrals. While this decision makes good business sense in many respects, it also signals the development of a workforce that is bank dependent in terms of both business development and product availability and expertise. The related prohibition against cold calling, however, applies to every advisor, an example of one standard being applied regardless of experience or circumstances.
Direct Bank outreach to clients
The Bank has gradually become more emboldened in its efforts to communicate directly with Merrill clients, often without the advisor’s knowledge and certainly without permission. Advisors who have built meaningful and longstanding relationships with clients see this as a disintermediation that undermines the unique value they provide to clients. Most advisors do see great value to clients in leveraging the resources of the Bank, but only when the advisor determines that it’s appropriate for the client.
Client retention teams
When an advisor leaves Merrill, clients will now receive a call from a member of the Client Experience Team, rather than a local manager or another local advisor. This is another example of how BofA is standardizing its processes and attempting to turn Merrill clients into customers. The impersonal and bureaucratic nature of this process again seeks to diminish the personal relationship that a Merrill advisor customarily has with clients.
Limitations on portfolio management autonomy
Whether or not an advisor is actively managing a book and creating models, further limitations on the portfolio management platform highlight BofA’s priority of managing risk while making assets sticky to the Bank. Advisors have universally shown that they value control and flexibility, and restrictions on a qualified advisor’s ability to differentiate their investment management approach—that is, to think independently—should raise concerns for every advisor.
In answer to the advisor’s question, “What am I missing by staying?” it may be nothing—so long as they believe that Merrill is – and will continue to be – the best place to serve clients and meet their goals. Planning for the future requires a bit of forecasting, and BofA has made it easier to envision the next 5-to-10 years for those paying attention.
The signs point to a new era being ushered in-one in which the firm believing it “owns” the client, is entitled to make decisions and set policies to control the advisor and determine the client experience. Whether an advisor is inclined to stay or to go, they owe it to their clients and to themselves to pay attention to what’s changing and to understand what the total view portends for the future.
As seen on InvestmentNews
This post first appeared on Perspectives For Financial Advisors From Diamond Consultants, please read the originial post: here