Merrill Lynch was the biggest net loser in recruiting and broker attrition in 2019. Nobody across the industry, recruiting or otherwise, expects that to change as we move through 2020. In fact, some expect it to get worse, with one particular rumor making its way through management and broker ranks at the bank owned firm.
Sources have taken to our inboxes to describe a late 2020 plan to exit the broker protocol to attempt to stem advisor losses. (Cc UBS executives and ask them how that’s worked out for the Swiss firm?)
One particular source gave us details on the potential plan and what they’ve been hearing:
“The conversations started in November as losses intensified across the second half of 2019. A certain amount of advisor attrition is tolerated at BofA because we are simply a division of the bank, obviously. But bank brass finally decided that it has gotten bad enough to begin formulating a plan to stem the tide. Clearly, the pace at which these decisions are made is laughable. But after a decade we’ve gotten used to that reality. I had hoped that a renewed recruiting push would find its way into the conversation – nope. Protocol exit looks like the play. And possibly a fresh round of small retention comp via a new deferred pool of funds and, of course, contracts.”
“As you can imagine, at least in the short term, this will accelerate defections and high profile departures. But the suits seems to think it is tolerable in the short term if they can lock in the long term fiefdom of 10,000 ML advisors.”
In one way this isn’t much of a surprise. Merrill joining UBS and Morgan Stanley in exiting the protocol would make sense and simply follow their competitor wirehouses off the proverbial cliff. You know, like suicidal sheep. That sort of has a ring to it, right? No longer the ‘thundering herd’ more so the ‘suicidal sheep’.
When, not if, Merrill takes this stance you can expect a good portion of the top 10% to 15% of advisors to hit the bid rather than cash a pennies on the dollar deferred comp bonus offer. And waiting with open arms will be the likes of Stifel, Wells Fargo, Raymond James, Dynasty and other RIA firms of distinction.
It’s coming, if you take a second you can probably even hear portions of the thundering herd tip toeing there way to the doors even now.