The Biggest Mistake Large Teams Make When Considering Making A Transition

We took a brief moment to discuss the single biggest mistake that large teams make (legally speaking) during a transition to a new firm. Without giving away the good stuff, Brian Neville (industry-leading securities attorney who’s handled hundreds of team transitions), was crystal clear as to what the biggest pitfall was and is.

Not only does Brian designate the focal issue, but he goes several steps beyond the surface issue to give listeners an understanding of how to avoid the trap firms think they’ve set for you. Give it a listen, it’s short and to the point, we know your time is limited.

If you’d like to speak with Andrew Parish or Brian Neville, fill out the form below and we’ll reach out to book a phone call.

 

 

Brian J. Neville, a founding partner of Lax & Neville LLP, has significant experience in broker/dealer, securities, regulatory defense, employment, and commercial litigation in arbitration forums and state and federal courts. He has arbitrated cases in at least 18 states and has been lead counsel on well over 500 matters.

Mr. Neville has successfully represented investors and broker-dealers in disputes involving sales practice issues and employment disputes. Mr. Neville also represents firms and registered representatives in enforcement actions by Financial Industry Regulatory Authority, Inc. (“FINRA”) (formerly the NASD and NYSE) and the Securities and Exchange Commission (“SEC”). On behalf of investors, he has recovered in excess of $50 million. On behalf of his defense clients, which tend to be individual registered representatives, management of broker-dealers or smaller/regional brokerage firms, he has successfully defended and resolved numerous cases.

 

BrokerChalk Match

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Practice

Merrill Project Thunder Reactions: “It’s more like Tropic Thunder around here, nobody is listening to that guy…”

Andy Seig has limited to zero credibility left with top tier Merrill advisors left at the firm. When he speaks, nobody listens. When he green lights a new initiative like ‘Project Thunder’ nobody listens. And when he speaks in corporate vague double talk… he’s quickly ignored.

His lack of influence was on display in the last ten days after the announcement of Project Thunder (who came up with that name?). Advisors we spoke to in every corner of the country simply rolled their eyes, while 90% ignored the details of the memo altogether.

Here are several quotes from Merrill advisors we spoke to in the past week:

“My partner and I thought it was laughable. There are no details, no increases to our bottom line in any way. And who came up with that name? It’s a clown show in the C-suite here. Stuff like this only proves it.”

“…it’s more like Tropic Thunder from that guy and his internal bank based PR folks. He’s a puppet of BofA.”

“Wake me up when they announce next year’s grid. If I had to guess, this is window dressing for more shenanigans to our comp, I’d even bet on it.”

“Nobody listens anymore. There is no trust. Zero culture. Using the term ‘Thunder’ as a marketing ploy is even more lame.”

It seems that cynical is the word of the day to describe the vibe at Merrill Lynch. And the proof remains in the pudding, or in this case, data. Large teams leave every week. Every single week.

And we hear, that teams that are in the fence are waiting for another shoe to drop with comp grid changes to give them the final push out the door. Based on recent history, you should probably bet on it.

Suffocating Compliance – Big Producers At Merrill Complain They Are Being Treated Like Bank Brokers

It isn’t enough that Merrill Lynch is now just Merrill. It isn’t enough that more than half of your colleagues that you respect have left the firm. It isn’t enough that Andy Sieg thinks that advisor attrition is ‘seasonal’. It isn’t enough that no matter your loyalty to the thundering herd and the Merrill brand – BofA just doesn’t give a sh%t about you.

That reality was hammered home again early this week with conversations we had with two large and well known teams. Beyond the cultural rot inherent at BofA/Merrill, the compliance burden has gotten nearly unbearable.

From an advisor on the east coast, “It is hard to describe the insults that come disguised as compliance on a weekly basis. I’ve got a perfect record and have put real effort into being a Merrill guy over the years. But almost every week I’m getting pinged by compliance over dotted i’s and crossed t’s.”

“An example last week… I sent an email to a client with some good news that their mortgage rates had ticked lower by a quarter point. Less than 4 hours later I got a compliance letter that I have to respond to regarding ‘quoting rates’ in a correspondence. It’s like I’m being treated like a trainee or bank broker. And responding to this shit takes time away from growing the business. It’s constant and makes it harder to do business here.”

We did a little digging and found that this has been common practice with BofA over the past year or so. Every email, every text, every syllable is scrutinized. And if you trip up, you’ve given them cause for termination.

We put together a short podcast Q&A with Brian Neville that speaks to the issues that have caused big Merrill teams to exit the firm week after week. The revelations he shared associated with surveillance were mind blowing. When tied to the above quotes it paints a picture of a legal ‘overstate’ at BofA that is cause for serious concern.

Another reminder that more than 200 teams with $1B or more in assets have left Merrill in the past four years. Read that again. It’s becoming increasingly easy to understand why.

SURVEILLANCE CONFIRMED: BofA Fires Multiple Merrill Advisors For Sexting (and game play)

We told you last week that firms were conducting different types of surveillance on their advisors. We also told you that BofA/Merrill was the worst offender. But it’s worse than that.

Beyond surveying your bank accounts (which can be mildly defended just in case you take side payments from ‘Grandma Jones’), BofA is now firing advisors for elements of sexting.

So personal behavior, which certainly isn’t any sort of crime and is done outside the confines of the bank itself, is now grounds for dismissal. Amazing.

Follow this for a minute. You receive a ‘free’ corporate phone, under the guise of monitoring client communications, they also spy on your personal conversations, then decide which of those seem to breach some sort of code of conduct, they then catalog it, and then you’re fired.

Nothing like a new and novel way to built culture and trust in your employer. And FYI – everyone reading this realizes that those phones can track your every location and move as well right?

So the story about being forced to own a ‘burner phone’ while working at Merrill now makes all the sense in the world. Amazing.

The most egregious of this current batch of firing was a broker, who asked to remain anonymous, shared messages via LinkedIn. Those LinkedIn DM’s were deemed inappropriate, even though they weren’t affiliated with anyone based in the wealth management industry whatsoever. After 22 years with Merrill, this advisor was fired.

Read that paragraph again. Your phone, LinkedIn, and private messages are being surveilled by BofA.

Tell me again why you are still there?

Merrill Culture In Six Words: “Call me on my burner phone…”

No reasonable participant in the wealth management landscape would argue against the erosion of the once and former strongest culture in the space: Merrill Lynch.

Under the leadership of Bank of America and Andy Sieg Merrill Lynch culture has evaporated, utterly and completely. In a prescient moment with an advisor last week, we found the essence of that epic erosion:

“Call me on my burner phone, everything else is monitored.”

Six words that should scare anyone that still works at BofA/Merrill. Call me on my burner phone. It’s like this guy is acutely aware that if he makes even the slightest misstep the ‘cartel’ that is BofA will show up unannounced and end their career.

The concern and need for a burner phone is certainly well founded. More than $200B in (NET) client assets have exited the firm in the past four years. A reminder that no other firm in the industry comes close to those numbers.

To break that down further, that’s 100 of the biggest teams in the industry. Based on publicly available data, the top 1% of the industry (advisors and teams) manage more than $2B in client assets. So BofA/Merrill has lost ONE HUNDRED of those teams in the past four years. That is a remarkable stat.

There are endless analogies that would drive home the need for a burner phone as a Merrill advisor. No matter which you use, any culture that forces you to use one can be summed up in one word: toxic.

LEGALESE – Brian Neville Describes Surveillance and Shenanigans As BofA Attempts To Slow Advisor Exodus

In an interview with leading securities law expert and well-known transition lawyer Brian Neville, we tackle issues associated with non-solicit agreements, advisor transitions, and business valuations should your firm exit the broker protocol. Some shocking revelations and instant food for thought.

 

 

Brian J. Neville, a founding partner of Lax & Neville LLP, has significant experience in broker/dealer, securities, regulatory defense, employment, and commercial litigation in arbitration forums and state and federal courts. He has arbitrated cases in at least 18 states and has been lead counsel on well over 500 matters.

Mr. Neville has successfully represented investors and broker-dealers in disputes involving sales practice issues and employment disputes. Mr. Neville also represents firms and registered representatives in enforcement actions by Financial Industry Regulatory Authority, Inc. (“FINRA”) (formerly the NASD and NYSE) and the Securities and Exchange Commission (“SEC”). On behalf of investors, he has recovered in excess of $50 million. On behalf of his defense clients, which tend to be individual registered representatives, management of broker-dealers or smaller/regional brokerage firms, he has successfully defended and resolved numerous cases.

 

Another Big Team Bails; Merrill Exodus Continues As UBS Adds Another $2B To Their Private Wealth Platform

There is no more anecdotal evidence needed here. The Merrill exodus that was predicted by this author now six years ago has become, as one Merrill advisor aptly put it a few days ago “who’s left today”.

That is where Merrill finds itself. Its advisors check industry publications to see who has left the firm every day.

Not each week, or each month… but every day.

This time the transfer occurred in NYC to the tune of nearly $2B and annual revenue at more than $11M.

Led by Stephen Kincade and Alexander Fridell the team made the transition based “almost purely on culture”, said a source close to the team. Other members included on the team are Chris Kincade (Stephen’s son) and client associates Zach Kingsley, Jessica McEntee, and Elle Schiowitz.

We mentioned in this publication last week that Merrill had lost $200B in client assets in the past four years. Now make that $202B. As big as this team in NYC is, Merrill has lost 100 of them in the past 48 months. Read that again.
It’s stunning… or according to Andy Sieg “it’s seasonal.”

We expect the procession and mass migration out of Merrill to continue as the level of noise in recruiting circles is at all-time highs. The fall has historically been the most active transition period for financial advisors. It will be exceptionally so this year.

Just one more time for effect: “The uptick in advisor attrition associated with competitive recruiting is seasonal.” – Andy Sieg

TWO HUNDRED BILLION DOLLARS: A Legacy Of Failure For Bank Of America And Merrill Lynch

Often times we forget what has happened in the past because we are so focused on the now or the next. Merrill Lynch advisors are currently focused on rumors swirling with regard to new policies, client retention teams, and a looming protocol exit. They’ve forgotten the level of failure that has been spearheaded by their current management over the past five years.

Two hundred billion dollars. $200B. With a B. BILLION. That’s the number of client assets that have left with long-tenured Merrill Lynch advisors in 4 1/2 years. A truly stunning number. Amazing on every level. That number is the equivalent of liquidating the entirety of client assets held at Robert W. Baird.

Put it a different way: Merrill Lynch has lost 100 teams that manage $2B in client assets. Or 200 teams managing $1B in client assets.

When one steps back and realizes the carnage here it is stunning. Truly stunning.

We wonder how a guy like Andy Sieg still has a job. He’s presided over one of the worst drawdowns in the history of modern finance. That isn’t hyperbole. It’s just the truth. And yet, Bank of America has decided that their response isn’t to reassign Mr. Sieg but rather make him more visible with scripts that claim that “recruiting losses are seasonal”.

And to be clear – when Merrill Lynch exits the protocol and presents their advisors with a new set of legal paperwork to sign, the exits will heat up even further.

Andy Sieg: “Everything is fine, nothing to see here…” (and in the background a once iconic Merrill Lynch brand burns)

Bank of America has effectively kept Andy Sieg in his position as a spokesman for what they want to be said when they want it said, and how they want it said. Nothing more and nothing less.

And yesterday he did just that. Take a look at his quotes regarding legitimately crippling attrition at Merrill Lynch:

“For all these positives, there will always be areas needing focus from leadership. Right now, it’s competitive attrition–higher in this quarter than we’d like to see,” said Mr. Sieg.

“Some of the increase can be attributed to seasonal trends, a bit like what we saw in 2019.”

What? Huh? Please explain a ‘seasonal trend’ in advisor recruiting? And has that same seasonal trend extended over a five-year period as Merrill has led all of its rivals in losing teams and client assets?

And what is the plan to combat the rise in attrition? Commercials aired during MLB baseball game broadcasts. Seriously, LOL.

It is a comedy of errors at a place that for half a century set the pace in the wealth management industry. And Andy Sieg is the face of its continued decline.

**A side note: while Mr. Sieg is proclaiming that aggressive advisor attrition is merely ‘seasonal’ Merrill is prepping for a rumored exit from the broker protocol by instituting aggressive client retention teams across the country. The client retention teams were actually announced by the firm last week. All of that to say this – if you’re still at Merrill, why?

SOURCES: Morgan Stanley Is Asking (Forcing) Large Teams And Their Biggest Producers To Sign Retention/Retirement Bonuses

In conversations with two different sources ‘in the know,’ we’ve learned that Morgan Stanley is asking their largest producers to sign what sound, look, and smell like retention bonuses but are being sold as retirement compensation.

Here is the setup from one of our sources:

“Morgan Stanley is telling advisors/teams above $5M to take a payment of 100% of their current T12 and connecting it to their retirement deal. In other words, take about half of your retirement deal (which is 220%) now and sign this document that you are staying and keeping your business here at Morgan Stanley.”

“You can imagine what the unspoken consequences of not signing that deal look like to management. If you don’t take the cash it signals that you are more inclined to leave the firm than stay. Now you’ve got a target on your back. If you dot and I or cross at wrong you’ll get fired. That’s the intention here. So this isn’t a retirement bonus, but rather a retention scheme.”

We spoke to another source that backed up these claims. All of this is being done in a very quiet, closed doorway with the firm’s largest producers. And Morgan Stanley has set a precedent over the past year that they won’t blink in firing big producers – not just for industry violations, but rather internal firm policy violations.

As, effectively, the biggest firm on the street Morgan Stanley management can make these moves. They can put this kind of pressure on advisors and not worry about the cultural implications. Keeping it ‘niche targeted’ to its top 10% or so of producers makes it seem/feel almost like a perk.

Take a step back and consider the cost. What sounds to good to be true probably is – a financial firm doesn’t give money away for free. Think about it.