PUPPET MASTERS – Bank Of America Stiffs Field Management On Year End Bonuses; Not Profitable Enough During The Pandemic

If you thought that Bank of America couldn’t do any worse in screwing up a once proud brand like Merrill Lynch, you were wrong. Last week they proved that the puppet masters pulling the ‘Merrill A Division Of Bank Of America’ strings aren’t finished killing off a once proud brand.

You really can’t make this stuff up. In a year that saw the current office-based wealth management business model get completely turned upside down, BofA thought it was a great idea to punish branch managers and other field management by cutting bonuses 30-60%. Those affected simply didn’t do a good enough job growing assets and selling enough bank products.

Seriously, why does anyone still work there?

A little reminder that Merrill basically isn’t allowed to recruit anymore. So managers are severely hampered on the NNA front; effectively at the mercy of the markets. Their best teams (read: with the biggest books and AUM) have been leaving in droves, so bonus cuts based on reduced asset growth during a pandemic while not being allowed to recruit – ludicrous, if not downright cruel. Again, puppet masters.

This is the reality for the ‘bonus pool’ for Merrill’s nearly 100 market leaders/managers. Pay (forget calling it a bonus, it’s PAY) was cut by 30% from 2019. That is 570 branch offices across the country who count on 50-75% of their total comp through bonuses. Good thing those government stimmy checks went out last month. :(

Even worse, some Market managers in the bottom third of performers got hammered with up to 60% reductions in expected bonuses. And one last kick in the crotch… a cut of this size has never occurred at Merrill. Never.

So to recap: your a Merrill manager of some sort, you can’t recruit, you are losing big teams every month, your name is no longer Merrill Lynch, your pitching bank products, during a pandemic, while working from your den or basement – and the bank you work for decided “hey it’s not good enough so here’s an unprecedented cut in your annual compensation.”

Does anyone check Andy Seig’s bonus payout??

Big Checkbook! Wells Fargo Outbids Rivals For $5.3M Merrill Lynch Team

If you want the biggest recruiting check, mows the time to hitch your wagon to Wells Fargo (see what we did there). The firm remains the most aggressive recruiter in the wealth management universe and it probably isn’t close.

Their stated deal (meaning, if you are a viable candidate or team from ML, MS, or UBS) is 340%. That’s is where the bidding begins. We’ve seen deals reach 375% with upfront checks tipping the scales at a cool 200%. Cha fucking ching!!

This past week a large team in TN migrated from (yes, you guessed it) Merrill Lynch and hit the bid in a big way. As we hear it, the upfront approached 200% and the total deal surpassed 360%. Take a look at their team profile and then let’s run the numbers…

Wells Fargo hired a team that included Will David Coleman, Jeremy Stephens, Justin Webb, and Steven Ragan. The group was annualizing revenue at $5.3 million a year. Based in a Merrill branch in the suburbs of Nashville, TN the group manages over $680 million in client assets.

Now for a little math. $5.3M in annualized revenue at 200% is $10.6M when they walk into the doors of their new Wells Fargo offices. In total their deal could go beyond $19M all in. Not bad for a group of guys that effectively started their careers 10-15 years ago. Like we said, cha-ching!

The financial metrics associated with Wells’ recruiting strategy are fairly simple: roll out deals that are nearly impossible to turn down and outbid the competition by 30-40%.

In spurts, being the biggest deal on the street is working.

Three Lawyers – The Proper Way To Manage Transitions When Leaving Non-Protocol Firms

The headline on this article gives you a bit of a heads up when it comes to transitioning from one firm to another. Lawyers. In this case, lawyers are your friend. But which of the three are to be your most trusted resource?

That’s a more complicated question.

Let’s take a look at the three lawyers you’ll need to successfully navigate an exit and entry to a new firm. In-house counsel, outside counsel, and counsel that you have personally retained. A virtual ‘three bears’ of legal minds to evaluate your most important career move.

**for this article let’s assume you are coming from a private bank or from a firm like Goldman Sachs, and are joining a wirehouse. So a wrinkle a stitch or two away from a ‘wire to wire’ deal.

In-house counsel is going to read you the actual letter of the law when it comes to your non-compete, non-solicit, and garden leave. It will sound like you are locked in a prison with the logo of your current firm patched into your orange jumpsuit. The firm you are joining has to follow the legal protocols associated with securities law and a precedence or else they end up at the wrong end of a lawsuit. So, cold porridge from this lawyer.

Outside counsel is going to give you a bit of a more liberal read on recent cases, what is allowed or not allowed, and what the fallout has been when previous teams have strayed from the ‘letter of the law’ when leaving their firm. This attorney is basically asking you to read between the lines of legal precedent rather than giving you useful advice. Again, he is provided at your new firm’s expense, so it is in their interest to protect the firm rather than give you the ‘spirit of the law’ good stuff. This porridge is still a bit cold for our taste.

Your own personal counsel should be the legal entity that does its best to facilitate both the letter and spirit of the law. They should set up calls with others that have traveled the exact path you are about to travel and have ‘on the ground’ voices provide you with intel. Intel that keeps you in the plausible deniability camp. Again, letter versus spirit of the law. Ultimately, this the lawyer you trust and take their guidance to the bank. They are paid directly by you and are vested in your success. The right temperature of porridge.

The download here is simple. Get legal opinions from multiple parties and follow a reasonable pathway to your new firm. Letter of the law? Maybe not. Spirit of the law. Absolutely.

Morgan Stanley Tightens The Noose, Fires Billion Dollar Advisor In NJ

At times we’ve discussed the nature of regulatory action in the wealth industry as being increasingly proactive. The Tom Buck saga is ‘Exhibit A’ for regulatory overreach and eventual incarceration. Did something similar just go down at Morgan Stanley in New Jersey?

Here is what happened:

David S. Weinerman was fired Tuesday for what Morgan Stanley called “firm policy violations” that did not relate to customer accounts. Given that the allegations aren’t related to customer accounts makes this case different than Tom Buck. Still, the size of Mr. Weinerman’s business is of real interest.

Weinerman had been managing more than $1 billion in assets and turning it over to the tune of $4 million in annual revenue. Another marker in the ‘we don’t care how big you are’ regulatory movement.

Mr. Weinerman was #6 on Forbes’ list of top New Jersey advisors this year. Of real interest, he has no customer complaints or regulatory disclosures.

So Morgan Stanley seems to have fired a previously perfect advisor with a billion in client assets for reasons having ZERO to do with customer accounts.

This doesn’t pass the proverbial smell test. What it does do is serve as another reminder to retain your own PERSONAL counsel and institute policies on and around your own team that go beyond company policies. Don’t use email, have your admin team do it on your behalf. Tread lightly, be more politically correct, stay away from younger staffers (or don’t hire them at all), and hire an internal ‘compliance liaison’ on your team so you don’t miss anything.

Nobody is safe in an active corporate and regulatory environment. Nobody. Just ask David Weinerman.

Morgan Stanley Exec: “Deals are at all-time highs, we are being very aggressive…”

In several discussions with Morgan Stanley executives last week we got an insider’s look at the firms recruiting priorities and the status of who/how they are recruiting. Some of it was predictable, in a competitive recruiting landscape; while other parts of the conversation were remarkable.

Here is a download of what we heard and how we interpreted it:

“Look, markets and client assets are at all-time highs and as a corollary, deals are at all-time highs. We are willing to be very, very competitive for the right teams in money center cities. We realize they are in high demand so we are doubling down on doing our best to put offers in front of them that make it nearly impossible to say no.”

“That is the current state of recruiting right now. Competitive doesn’t even begin to explain it. Our reputation of tech is playing a meaningful role in winning battles, but let’s be honest here – upfront bonus dollars is what recruits are in the game for – and pressing upwards of 150-175% is the game right now.”

“The most competitive bids? No doubt is Merrill PBIG teams. They want to leave and everyone knows it. They are tired of the BoA bullshit and are shopping. Not window shopping, legit price comparisons. We liken ourselves to Amazon, and we won’t hide from being the biggest firm on the street (in our category). We are perfectly comfortable with the give/take in our pitch.”

Our take…Morgan Stanley is a philosophical choice. It’s one or the other – being able to understand that with scale comes a certain amount of institutional baggage. But that baggage also carries the reality that there isn’t a box that can’t be checked for the biggest and best clients. Ergo, no compromises on the client-side.

The dollars associated with that choice – in the words of a well-known politician “bigly”.

Broke: Merrill Lynch Recruiting Is A Zombie Cartoon

Merrill Lynch, the firm that used to set the entire narrative for the wealth management industry, isn’t even a skeleton of its former self. It has become a zombie. The walking dead. An easy-to-kill, slow-footed organization that doesn’t have a meaningful reason to continue to exist. Zombie.
Overly harsh one might ask?? No, it isn’t. In fact, Merrill Lynch isn’t even called Merrill Lynch anymore. Bank of America thought it was a great idea to rebrand as just ‘Merrill’ – you know, the name of Mel Gibson’s brother in the movie Signs. Yep, that guy can now accurately be equated with the Merrill brand. Washed up.
In just the 8 weeks since the turn of the calendar, the continued acceleration of Merrill teams has migrated to Morgan Stanley, UBS, and Rockefeller. Does anyone want to guess how many recruits Merrill (a division of Bank of America) has signed up in that time? How many have been announced? Nada. Zilch. Zero. 
Merrill Lynch teams are increasingly easy to poach as the pervading attitude is “there really is no reason for me to stick around anymore.” Management turnover, culture destruction, colleagues have bounced – if you are a big team or advisor still at the firm you either hate change as much as I hate asparagus, or you simply aren’t marketable. It’s one or the other.
In a scene from The Walking Dead, rival firms have a massive cache of weapons, and Merrill advisors keep slowly walking in the same direction. Easy targets. “Swing away Merrill, swing away…”

William Blair Team Managing $2.2 Billion Forms RIA

Thomas Salvino, whose Salvino Wealth Management team managed $2.2 billion at William Blair in Chicago, has gone independent and launched Performance Wealth, a registered investment adviser based in Hinsdale, Illinois.

The nine-person team includes Tom’s father Al, who began his securities career in 1963, Tom’s brother John, and Tom’s daughter, Grace.

Also joining the firm as president and chief compliance officer is Charles Lesser, formerly of Balasa Dinverno Foltz.

Performance Wealth also has offices in Naples, Florida, and San Diego.

Whose Next? As Private Banking Recruiting Ramps Up Which Wirehouse Is Set To Benefit Next

The ranks of ‘private bankers’ at global investment banks like JP Morgan and Goldman Sachs have become some of the most sought after recruits in 2020. Their relative books of business have been dubbed more portable than previously believed and the market is beginning to reflect it.

We’ve previously discussed that UBS has been committed to and benefiting from recruiting ‘non-traditional’ teams in the past year, but we wonder, who’s next? What firm might be the next to jump into the fray and begin valuing these groups based on their stated revenue as opposed to their W2 personal income?

As of this post, we aren’t sure who it might be, but we think it makes sense for both Wells Fargo and Merrill Lynch (ML has dipped their toe into the private banking waters a bit already). Wells Fargo’s inclusion is obvious – they need the good press, momentum, and to replace the advisors that have walked away from the firm over the past two years.

And Merrill Lynch – it’s well documented that every headline associated with a team leaving BofA/ML isn’t a small fish. Big teams have been leaving ML for years. Adding outsized assets and revenue by way of private banking teams would serve the firm well.

No matter who it is, they aren’t getting anywhere until they begin to adjust their recruiting deals away from W2 income. Someone is going to catch up to UBS – let’s see who gets there first.


Sneaky Good – First Republic Continues To Win Head To Head Battles For Wirehouse Talent

First Republic is no longer a secret among elite advisors. The banks’ wealth management arm has stacked up big wins from every corner of the wealth management map.

As of late, they’ve been particularly successful with two firms, Merrill and Lynch. In our conversations with advisors engaged with First Republic the word ‘culture’ comes up a lot.

Of course, culture matters, but so does the sizable deal First Republic offers elite advisors. Over a seven-year period, the FRB offer can go as high as 500%. Wow. And 200% of it can be had as you walk in the door moments after resigning from your old firm.

Back to culture for a moment – Merrill advisors continue to seek out the types of firms that feel like Merrill use to feel; exclusive, collegial, and entrepreneurial. FRB fits that bill well, so winning recruiting battles should continue.

Expect more advisors from the firms, Merrill and Lynch, to find their way to FRB. :)

Bernstein Bubble Pops; Latest Attempt At Advisor Retention Falls Woefully Short

Alliance Bernstein may be most well known for its asset management business, as it rivals some of the biggest names in finance. But less well known is the firm’s wealth advisors who manage billions for UHNW investors and families.

In the past two years, Bernstein advisors have become prime targets of wirehouse firms in money center cities. UBS, Morgan Stanley and RBC, have been active in grabbing big teams from AB.

So Bernstein thought it wise to try to lock in it’s best and biggest advisors. Lol, nice try. They put contracts (retention agreements) that added 2 bps to their measly 20 bps payout and a few extra dimes and dollars to their retirement package. Literally, pennies on the dollar compared to the likes of UBS.

Bernstein teams and some of their larger advisors haven’t slowed in taking calls from recruiters and rival managers offering deals that are 10x better than what their current firm is offering as an ‘upgraded’ retirement package.

The attempt to retain their best has all but backfired.