Bank of America Changes Trainee Contracts – Forces Them To Sign Or Be Fired

If you have decided to go work for Merrill Lynch, under the ownership of Bank of America, in the past 3-5 years – make no mistake, you are a banker. Make no mistake.

Read this quote from Andy Seig a bit ago and tell us if you disagree:

“We’re uniquely positioned to identify future advisor talent while they’re still, in many cases, working in other lines of business, particularly within our consumer bank, in our Edge business, where they’re already licensed to do securities business and are advising clients and then have an aspiration, over time, to become advisors in the Private Bank or at Merrill.” Sieg made these comments on June 14 during an online Morgan Stanley Financials, Payments & Commercial Real Estate Conference.

Notice that the ‘Merrill’ inclusion is at the end of a long line of banking positions. A new Merrill trainee now has to navigate a maze of banking roles to ever find their way to the actual desk of a Merrill advisor as most of you reading this understand.

But wait, there’s more…

When presented with new agreements associated with new roles and career paths, trainees were given an ultimatum: sign it or your services are no longer needed and you’re fired (and here’s a little severance so you’re not actually fired). And then Merrill was ecstatic that 96% of those in the program signed it.

Take a minute to re-read that last sentence because it’s a big deal. BofA signaled their ability to lock in trainees as bankers and remove ALL OF THEM from any participation in the broker protocol.

If you think that Merrill remains in the broker protocol you’re fooling yourself. It’s the same as believing that Merrill still has nearly 20k advisors at the firm. Neither of those things are true. Fully half of Merrill’s banker brokers are now under non-solicit agreements and ineligible for inclusion in the broker protocol.

The entirety of this article can be summed up this way – BofA/Merrill continues to look more and more like J. P. Morgan and less and less like Morgan Stanley

Slow Leak Out Of Bernstein Picks Up Speed; Larger Advisors Migrate To Greener Pastures (mostly to UBS)

There’s been a lot said about the massive shift in private banking and ‘non-traditional’ recruiting over the past several months. Much has been written about both J. P. Morgan and Goldman Sachs teams moving UBS and to a lesser extent, Morgan Stanley.

Add Bernstein advisors to that narrative. In the past 12 months these are the names and numbers associated with transitions away from Bernstein:

Dallas $13M John Baumgarten, Cory Dowell and Chad M. Jones
– San Francisco $7.6M Robert Stoker
– New York $10M Alex Hewit/Mike Tucker
– San Deigo $7M Chis Pitzak
– Nashville Jay Degeare $12M
– Julian McGraph $4.5M

Each of those moves is of note based on the well-known reputations that each advisor had within the Bernstein ecosystem. These aren’t lower-level ‘analysts’ or VP’s. These are Managing Directors of the firm.

A note before we close out this article – UBS is in an absolute tear and is showing ZERO signs of slowing down. Zero. They’ve very effectively taken dozens of J. P. Morgan private bankers, several Goldman Sachs teams, and Bernstein teams. As we hear it, the pressure and focus on Bernstein and Goldman are about to ramp up in the second half of 2021. A pivot, or shift if you will.

It wouldn’t surprise us at all if the same amount of advisors/teams noted above came out of Bernstein in the next six months, increasing the velocity of movement out of the firm. Just expect more headlines.

The narrative and reality with regards to the Bernstein to UBS pipeline are real and worth understanding. The proof, as they say, is in the proverbial pudding.

J. P. Morgan Private Bank To Hold Conference Call This Week; To Discuss Retaining Top Talent (LOL)

In a conversation with a current and prominent J. P. Morgan Private Banker, several internal strategies for dealing with the current exodus were shared with us. To describe those strategies as ‘underwhelming’ would be exceptionally kind. It’s as if J. P. Morgan Private Bank leadership has never faced any actual ‘live bullets’ by way of competition.

To be more clear – they have no idea what they are doing.

Two strategies that were shared with us seemed so weak that we couldn’t believe them until they were explained even further: a conference call this week to discuss retaining top talent and 10% salary increases for top analysts (that was widely panned by the actual analysts).

To better understand the conference call later this week to ‘retain top talent’ – let’s break it down. This is a call by management at JPM PB to discuss WITH top talent how they’d like to be retained. This is how far behind the curve JPM PB leaders are. Nearly two months after massive teams in Dallas and San Francisco walked away from the firm (as well as Atlanta, Miami, NJ, CT, LA, etc etc) management is hosting a call to ask “well what do you guys think”. Omg! We expect a guy like Josh Navarro to have lots to say lol.

The other strategy had to do with paying lower-level employees at the Private Bank an extra $5k a year. Seriously? That’s an extra $400 a month, or about $280 after taxes. So not even enough for a decent meal once a month in most money center cities.

And you wonder why the mass exodus to UBS and Morgan Stanley isn’t about to slow down.

Remember we told you that David Frame (CEO of the Private Bank) is on the hot seat. That seat gets warmer by the day when the best he’s got is conference calls and “we promise to pay you more, trust us (but we won’t put it in writing).”

Just an FYI – when a JPM Private Banker moves to UBS they literally put the next 10-12 years of annual comp and bonuses in an actual contract. Not words, a contract. Read that again.

A Dynamic Recruiting Conversation: “Should we even consider Wells Fargo?”

In a lengthy discussion with a team that seems determined to leave JP Morgan Securities, multiple points of the recruiting and due diligence process were uncovered. Given the depth of the conversation, the highlights seemed to be noteworthy and of value to the wealth management discussion.

With assets under management and revenues at all-time highs across the industry, recruiting is white-hot. Deal percentages are at the highs, while hurdles inside deals are near all-time lows. It is a seller’s market in every way.


You happen to be tethered to a Wells Fargo logo. The conversation is much different given the missteps that have come from that firm in the past 24 months. Whether it be fraudulent account openings or a newly minted CEO making racially insensitive remarks, Wells Fargo has stumbled its way to where it currently resides – a recruiting afterthought.

Here is how that conversation went last week:

“Should we even look at Wells Fargo? I’ve heard their deal is big, but will the fog ever lift from that place? Leaving JPM and the brand itself is really our only challenge with client transition – I can’t imagine the extra weight explaining a move to Wells Fargo would entail.”

“Are serious teams really going there or is it just straight-up money grab? It feels like anyone that goes there is striking a massive almost off-book deal. That’s just our perception. Merrill Lynch is probably a more interesting name than Wells at this point.”

Oof. Merrill (a division of Bank of America) is more interesting right now. If there was ever more painful wealth management recruiting take we’ve yet to hear it.

But that is where Wells Fargo finds itself. The biggest deal on the street, paying recruiters up to 10% deal fees, and adjusting deals for teams in any way possible to lure them into the fold.

As the saying goes, “desperate times call for desperate measures.”

Betting On Zero: The Friction Associated With Recruiting Due Diligence Has Dwindled To Almost Nothing

Trends and changes often sneak upon us. We usually don’t see them (or act on them) until it is nearly too late. This is an article to make sure you see a current trans very clearly and don’t let it pass you by.

For the entirety of your career, the idea of engaging in the process of discussing a move to a new firm and walking the pathway of due diligence was a ‘cloak and dagger affair. Taking phone calls off-site, in your car, lunches across town, using clandestine email accounts, etc etc. The stress associated with the process of getting a meaningful offer kept most advisors from pursuing the process.

**CLEARS THROAT** All of that is gone. Gone. Gone. Gone. Due to changes brought on by the Covid pandemic the ease of engaging with firms interested in your services has never been easier. If you want to take a phone call from a rival manager, no problem; take it from your home office and your cell phone. We doubt your significant other is going to report you. Need to take a meeting with department heads important to your book? Again, no problem; jump on a Zoom call from your deck.

The point here is this: the friction associated with the recruiting process has never, ever been lower. In fact, it is approaching frictionless. If there’s anything positive that’s come from Covid associated charges to the industry, this is one of them.

If you are betting on zero and looking to find the best value for your book (with markets and client balances at all-time highs) the ‘climate’ has never been better.

Keep An Eye On The Uptick In Morgan Stanley Recruiting; Dallas Merrill Team Another ‘Competitive’ Win

Morgan Stanley isn’t grabbing all of the recruiting headlines in wealth management these days, but their trajectory is worth noting. Their latest win in Dallas is notable given the competitive nature of the bidding versus rivals old and new.

The terms of the deal haven’t been disclosed but landing a Merrill team doing $5.5M in annual production these days is no small feat. Merrill may be the most heavily recruited ‘away’ firm on the street right now, so every ML situation is competitive.

The group that migrated to Morgan Stanley in Dallas is captained by 39-year vet John Calandro along with his brother and son, Kevin Calandro, and Rob Calandro. They manage more than $720 million in client assets and brought with them admin staff Shea Self and Jonathan Hicks as well as Redding May.

Now here is the competitive bidding part of it – this was a three-horse race. UBS and Rockefeller were both heavy contenders for this team’s services and pushed their deals higher.

A source close to the negotiations had this to say, “each firm had pushed their deals and deal structures to the limit and well past 300%, ML teams are commanding premiums right now.”

And there is the money line: Merrill teams are commanding premiums right now. Including deferred comp balances, the Morgan Stanley deal breached the 350% number. Cha-Ching!!

Morgan Stanley will continue to be aggressive and maybe the ‘belle of the ball’ for the second half of 2021. Get your popcorn ready.

Wells Fargo Rebirth? Even Offering The Largest Recruiting Deal On The Street Isn’t Working

Its well understood that wealth management recruiting is white-hot. White. Hot. It’s a seller’s market as even middling advisors and teams are in a position of strength, commanding premiums on stated deals in the wirehouse space.

So what to make of Wells Fargo’s position? It’s simple really, no matter what they’ve tried (apologies, congressional appearances, new CEO, and executive leadership) the narrative is largely negative. Advisors have nearly zero interest in Wells Fargo as a destination. That’s not an exaggeration, it’s an ‘on the ground’ fact.

Advisors’ current view of the firm is a fallback at best, and a ‘no chance I’d consider them’ at worst.

A year ago it looked like Wells Fargo may have been turning the corner, and then… the newly minted CEO made a boneheaded comment about diversity on a conference call. In today’s corporate environment, that was an epic mistake. Any momentum that may have been building died right there.

Wells has been attempting to employ the ‘money talks and bullshit walks’ approach to recruiting, effectively offering the largest deal on the street. It hasn’t mattered.

Will Wells Fargo eventually make it back to being a meaningful player in the wealth management recruiting landscape? Maybe, but it’s far from certain.

Merrill Lynch Reveals How They Are Fudging The Numbers On Headcount; Replacement Rookies Being Trained As LinkedIn Experts

What a delight it must be to work at Merrill Lynch. Not only do they hire 3,000 rookie brokers a year, but BofA also does their level best to attach one or two of those new trainees to your team, ensuring an extra ‘tether’ keeping you at the firm.

It hasn’t worked. Merrill Lynch has led the list of client asset losses versus its peers up and down the wealth management tiers for more than five years. Every week a new advisor/team leaves the firm for greener pastures. Those that leave (and we’ve done the numbers) are averaging more than $1.7M in annual production and $417M in client assets (and an average of an 18-year tenure at the firm as well).

So the largest share of departures is coming from the top 10% of the workforce at Merrill. The best and the brightest continue to leave.

So what has Andy Seig and BofA/Merrill decided to do? They just told us: hire a massive flock of rookies each year and restrict them to sending LinkedIn direct messages to potential targets. Genius!! Because everyone loves getting unsolicited LinkedIn DM’s.Via Yahoo Finance:

“Merrill Lynch Wealth Management is revamping its training program for 3,000 fresh-faced brokers, including placing a ban on cold calling and expanding the initiative’s accessibility to attract more diverse talent.”

“Participants will be directed to use internal referrals or LinkedIn messages instead of cold calls, executives said on a conference call discussing the changes. The length of the program will be cut in half, from three years to 18 months, with a goal of graduating 1,000 new advisers a year within the next few years, according to Andy Sieg, president of Merrill Lynch Wealth Management. One of the goals of the changes is to reach an 80% graduation rate, compared with a historical industry average of less than 30%.”So to boil that down for you: Merrill is hemorrhaging their best talent and billions in client assets and replacing it with 23-25-year-old trainees being told to send LinkedIn messages. Seriously, LOL!

We continue to wonder, day after day, why do teams and advisors of scale stay at Merrill. It makes no sense other than complacency and the ‘boiled frog’ theory. What a shame.

Read more

Read more

Private Bankers Listen Up! The Difference Between Deals Offered By UBS And Morgan Stanley

Two firms have made the biggest impact in recruiting private bankers away from J. P. Morgan, Goldman Sachs, Bank of America, and Citi. Both UBS and Morgan Stanley have decided that recruiting a different subset of teams from firms that could be called ‘non-traditional’ is worth every dime they can spare.

So what is the difference between what UBS and Morgan Stanley are offering these teams? **a quick reminder that UBS has been significantly more successful in their pursuit of private bankers by nearly 4x versus Morgan Stanley.UBS and Morgan Stanley are near equals when it comes to product, platform, and comp grid payout. The difference lies in the valuation of the business and client relationships that private bankers have built over a number of years.

Here is the money line: UBS is offering a deal based on the gross annual revenue (think ‘scorecard’ or ‘gross credits’) of a private banker or team, and Morgan Stanley is making their offer based on the net revenue (W-2).

Let’s break it down a bit. Currently, UBS will look at a gross credits annualized report for a Goldman Sachs team and put together a 250% deal on the top-line numbers. If that number is $10M, then the deal turns into a $25M deal in an instant.

Morgan Stanley (focused on the net number) will ask that same team for their W-2’s and construct a deal based on the lowest common denominator associated with the ‘trickle down’ revenue model for a Goldman Sachs team. A $10M team at Goldman will have W-2’s that will show +\- $1M. A 250% deal based on ‘net’ numbers ends up making out at $5M.UBS = $25MMorgan Stanley = $5MThe dramatic difference in those numbers makes it crystal clear why UBS is winning private banking competitive recruitment 4-1. Evaluating competing deals that are separated by 5x generally makes the decision simple.

As of today, UBS is the clear choice for private banking teams.