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Merrill Lynch has clearly pivoted from even giving reasonable lip service to recruiting tenured advisors at rival firms like Morgan Stanley and UBS and recent hires have made that clear. The force withing the ‘thundering herd’ that continues to turn Merrill into a psuedo bank brokerage has decided that private bankers are the preferred flavor of the month, and the younger the better.

This clear change of direction has led many to believe that the firm will eventually move to a wholly different compensation structure that eschews traditional ‘grid’ comp in favor of salary/bonus. I doubt that the firm makes it to that sort of structure anytime soon. In fact, it would be an epic surprise if they ever get to that type of seismic change in the next decade. They simply have too much to lose given the tenuous state of elder statesmen at the firm and the speed at which they could leave. But…

Should Merrill Lynch make good on a particular rumor of late, and exit the broker protocol we could be looking at a real sea change at the bank/firm.

Speaking to a number of recruiters who have made a ton of money from Merrill Lynch over the years they confirmed the interest in young, private bankers and the firms interest in paying them discounted, back end heavy deals. The thinking is that the deals aren’t a killer on quarterly balance sheets and the private bankers themselves aren’t jaded and cranky because of changes that have occurred at Merrill. If anything the newly hired private bankers are ecstatic about the grid comp model and other benefits available to them versus indentured servitude at JP Morgan or Goldman Sachs.

One recruiter had this to say, “Any private banker with reasonable assets and under the age of 40 is almost the perfect recruit right now at Merrill. Sure, they will talk to big teams at direct competitors, but they get giddy about private bankers at JPM and GS. And you’ll continue to see movement into Merrill from that section of the market.”

Expect to see younger and larger teams migrate to Merrill over the next 60 days. In fact, we know of several GS teams that are in deep conversations with Merrill right now. So keep your head on a swivel.

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