January 23, 2024
Jason Diamond Quoted
By Dan Shaw

For the second time in just over a week, UBS Group is announcing the recruitment of a wealth management team overseeing billions in clients assets from its rival Merrill.

But many in the industry point out that that nominally low figure obscures the fact that many of the teams leaving are those with the most experience and strongest client relationships. Jason Diamond, an executive vice president at the recruiting Firm Diamond Consultants, said it should in some ways come as no surprise that advisory groups with the most years of industry experience are also those with the greatest propensity to leave.

“They are the ones who notice the most how much the firm has changed,” said Diamond, who did not work on either of the UBS deals.

And Merrill has perhaps changed more in the past decade than any of its Wall Street rivals, said Diamond. Diamond, who did a stint at Merrill from 2015 to 2018, said it’s in some ways misleading to refer to the firm as Merrill anymore.

Ever since its acquisition by Bank of America amid the housing market collapse of 2008, Merrill has steadily undergone a process of what Diamond deemed “bankification.” Many decades-long employees, he said, can today scarcely recognize the firm they started working for.

“It really should always be called Bank of America Merrill Lynch,” Diamond said. “For lifers who lived through the glory days, it’s very clear now that it’s Bank of America calling the shots and not Merrill.”

To be fair, most large Wall Street institutions have undergone massive changes since 2008. Diamond said Merrill advisors’ grievances arise not just from a perception that things aren’t the same as they used to be but also from a litany of specific causes.

Many feel that their compensation is too closely tied to their ability to sell Bank of America products, that they’re mired in bureaucracy, that the firm is too rigid about compensation and too averse to taking risks. Diamond said he seldom hears complaints about big-picture things like Merrill’s technology offerings or trading systems.

“And it’s very rare that you have someone who points to one single factor for why they are making a move,” he said. “Once in a while, someone will say, ‘It was XYZ policy.’ But 95 out of 100 times, it’s death by a thousand cuts.”

Turnaround possibilities

Merrill has itself recently revived its recruiting efforts with sign-on offers now reaching as high as 400% of a team’s previous year’s revenue. That again puts it in the same recruiting conversation as its big-league rivals UBS, Morgan Stanley and Wells Fargo.

But whether that will be enough to make up for the steady outflow of prominent teams is another question. Besides the two advisory groups recently lost to UBS, it also saw a 26-person team managing $5 billion leave for Rockefeller Global Family Office this month. Most members of that group, whose move was first reported by AdvisorHub, also started their careers at Merrill.

Diamond said he thinks Merrill’s troubles in part lie in the stream of headlines announcing people leaving the firm. To counter the steady beat of bad news, he said, Merrill will need to make some noise of its own in the opposite direction.

Doing that will most likely require the firm to be willing to pay out even more than its most generous competitors for some top teams.

“It’s really hard to get somebody excited about Merrill when all they hear is that advisors are leaving really,” Diamond said. “So they will probably need to overpay for a couple of teams to get some meaningful wins on the board. And then, with those wins, maybe they can perpetuate some further wins down the road.”

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