Tag Archive for: Merrill Lynch

Defending Decline: Merrill Lynch’s Gamble on Newbie Advisors Amidst Bank Failures

Leadership is a constant test, and when Eric Schimpf and Lindsay Hans stepped into the shoes of Merrill Lynch’s top brass as co-presidents of the wealth management division, many of us watched in anticipation. With a quarterly revenue dip amidst a wave of bank failures in 2023, the dynamic duo took center stage, defending their strategy with unrivaled zeal.

While many advisors questioned their approach, Schimpf and Hans boldly pointed to their acquisition of 190 advisors, a move likely attributed to the fallout of failed banks and the hiring of brand spanking new advisors. “Embrace the new,” they championed, as they doubled down on hiring inexperienced advisors—now comprising a staggering 23% of Merrill Lynch’s advisory force. Defiantly, they shrugged off attrition rates, painting a rosy picture not represented in reality. Despite the numbers speaking otherwise, the duo declared Merrill Lynch as the beacon for top talent.

Yet, industry expert Roger Gershman of The Gershman Group was less enthralled, revealing how seasoned advisors scorned the firm’s approach, fleeing to greener pastures. “Why linger in a place where sticky products overshadow clients’ best interests?” he stated, “smart advisors just aren’t buying it, not to mention legal consequences advisors might face for not upholding Regulation BI.”

With the recent $250,000 fines slapped on Bank of America for shady practices, skeptics question what dark arts are being passed down to rookies, all in pursuit of new business. Training turned into a program of mind-altering indoctrination, coercing advisors to prioritize profits over ethics, pushing the boundaries of legality – a maxim even imposed through new training and education for veteran advisors. This is entirely the wrong kind of pressure on advisors to do right by their clients, technically breaking SEC guidance.

The audacious co-presidents aspired to expand the size and prowess of advisor teams, creating an impenetrable fortress to trap clients if an advisor dared to depart. Yet, Schimpf and Hans appeared oblivious to the raging storm of negative press in social media, condemning the firm’s law-defying operations. The echoes of Wells Fargo’s past misdeeds reverberate.

Bank failures loom large, raising the haunting question: Is Bank of America too big to fail, a time bomb ticking towards a 2008-like catastrophe? As the firm tangoed with the boundaries of legality, one wonders if the time will come when the penalties outweigh the gains, putting clients and advisors in peril.

In the face of these tremors, the bold gamble of Schimpf and Hans could propel Merrill Lynch to new heights or lead them down a perilous abyss. Only time will tell if their audacious dance with destiny will be hailed as brilliance or remembered as recklessness.

Highest Deal Ever Inked – $16M Merrill Team Trades to UBS

There’s been so much movement of advisors lately trying to find the best cultural fit for themselves and their clients. We’ve spoken at length about FRB advisors on the move, and now breaking news is that UBS has just landed a $16 million team in NYC led by top in state advisors Michael Bromberg and Daniel Gerschel. The BG Group manages $2.5 billion in assets comprising work for executives from Fortune 500 companies, doctors, lawyers, and figures in the entertainment industry. The group spent ten years at Merrill and was previously with Morgan Stanley. It is clear that the culture set in place by former head Andy Sieg at Mother Merrill continues to be a bad fit for the seasoned advisor, the bleeding just won’t stop.

Roger Gershman of The Gershman Group, a consultant for advisors, knows well of this transaction, he stated “the Bromberg and Gerschel Group are a very high-profile team who were not ‘buying’ the Bank of America banking model.” UBS is being particularly aggressive, seeking top teams from Merrill nationwide to recruit, and they are offering the highest possible economic packages compared to most any firm on Wall Street.”

He added, “for the right Merrill team with a good business mix and culture, UBS can offer huge 400-450% deals with frontends and backends that are essentially guaranteed.”

In the first quarter, UBS added a net $8.2 billion in client assets. CFO of UBS Americas, Sarah Youngwood, said during an earnings call that the firm was focused on keeping costs flat “while continuing to be on the offense in terms of our FA recruitment and organic growth.” UBS currently has 6,000 brokers in North America. UBS is luring advisors with attractive bonuses, upfront cash, and guaranteed paid bonuses paid as salary over years, not salary plus bonus. Could it be that UBS is the destination of choice for the seasoned advisor versus the young gun salary plus bonus firms such as JPMC and Merrill? We’ve watched the bleeding out of Merrill at the very least, and with JPMC’s hawkish culture, they might be next.

Captain Andy Abandons Ship – Heads to Citigroup

You can’t make this stuff up. The number of surprises over the last few weeks just keeps coming. Who could have forecasted that Andy Sieg who pronounced himself to be a messiah of sorts for Merrill Lynch with all of his cost-cutting measures, grid cuts, hiring freezes, and culture changes which literally have driven many of Merrill’s top advisors out over the last few years has now abandoned even those remaining who believed in him. It is now crystal clear Sieg’s motivations regarding his true intentions, converting one of the most successful, entrepreneurial wealth management advisory models the world has even known, Merrill Lynch’s Thundering Herd, into a cookie cutter, salary bonus, mainstream private banking model. Merrill Lynch advisors have been fighting for years for their sovereignty against the BOA private banking model that Andy has been pushing with all his Tea Leaves messages. How ironic, Andy who claims he fought hard for the legacy Merrill Lynch advisor now heads to Citigroup, a pure salary/bonus private banking modeled firm leaving tracks of devastation in his wake.

You’d think with the departure of at least a guy commanding some attention and respect, even if his ways were unsavory at best, Merrill would think to put someone noteworthy in his place. One powerful advocate who commands an audience, representing the best interests of the legacy Merrill Lunch Thundering Herd is what advisors deserve.

Not so. Merrill, or should we say BOA leadership, has announced two underwhelming co-presidents, Lindsay Hans, who was just a divisional manager for 10 years, and Eric Schimpf, who is also only a divisional manager, been on and off again at the firm and lately only been there for 10 years. Two regional managers are chosen to lead this firm who have nowhere near the breadth of experience necessary to command such a monumental sales force. And as anyone knows, there is confusion in being led by two versus one consistent voice. Do these two even get along, have the experience and are they even prepared to take on such a massive role?

We asked Roger Gershman who specializes consulting top Merrill teams says, “advisors at Merrill have spent their life career with decades of loyalty, advised their hard earned clients into Merrill’s products and services, have managed their team’s growth, have built outstanding business’s, and to not have the respect of a CEO that represents their interests? Very disappointing.” Clearly this is by design for Bank of America as another stake in the ground that it is their firm, their ways, their model and their shareholders that matter most.

We’ve covered extensively the turmoil and mass exodus of advisors out of Merrill Lynch under Andy Sieg’s management. CEO of Bank of America, Brian Moynihan, power game seems to be over with full reign on the future of Mother Merrill. Gershman adds, “advisors are smart and its obvious the direction of BOA, I think we’ll see a free fall now at Merrill with an ever-greater push of cultural shifts and comp cuts.” For legacy advisor advisors the question becomes how much more can they rely upon their parent banks (big or small) to manage their affairs with overbearing costs, compliance and regulations and not to muck up what are thriving profitable advisory businesses.

Will the mass exodus continue? We think yes. The question is with banks faltering and affecting their wealth management divisions, where to run and how quickly can advisors pivot given the dramatic changes in such a short period of time? Clearly there is a tug of war between financial advisors and big bank’s shareholder interests. Merrill advisors beware- protect your team, your business, and your career.

Breaking News: Bad Weather Hits Merrill with Hiring Freeze

The bad news continues to flow out of Merrill Lynch. The firm has just announced a freeze on the hiring of all support staff and analysts. In effect, if producers lose a sales assistant, they won’t be able to bring in a new one. This move impacts the everyday routine of running a book of business for advisors. Assistants and analysts are integral to the white glove service advisors’ endeavor to provide. Without such staff, advisors will have to take more time attending to research, data input, systems, and technology – taking away time from live time with clients and potentially bringing in new ones.

Andy Sieg has been relentless in his siege on advisors. The overarching theme is a drastic change in business culture and the way in which advisors are to conduct business, if not in compliance, the message is get out. Advisors have been leaving in droves. In January, Sieg, when asked what matters most to advisors stated, “I think that they certainly value capabilities. I mean, all strong advisors, they wake up every day thinking about, ‘how can I do the best job possible for my clients?’ And so that means they need a set of capabilities, a set of tools, whether we’re talking about our technology, underlying products, specialists.” Hm. Sieg states he is trying to empower advisors with every tool they need to succeed, reading the tea leaves, Sieg can’t stop himself from saying the opposite of what he is really doing. When we look at the bottom line under Sieg’s management, is what he is doing truly helping the overall business picture at Merrill? We think not. For all of 2022, Merrill’s wealth management units reported net AUM flows of $20.7 billion—or nearly $800 million less than what was recorded for only the fourth quarter of 2021. Sieg is all about bravado and hot air, nothing else.

Roger Gershman who runs a boutique consulting firm stated, “we’ve seen this nonsensical pattern out of Merrill for years now. Freezing support staff hiring continues to hurt advisors and the clients they serve.”

The thundering herd is losing its thunder day after day, in time the Merrill bull might end up just like Ferdinand, setting in the flowers daydreaming with nothing else to do because all the advisors and business is gone.

Is ‘Mother Merrill’ Dead?

The 15,000-strong Thundering Herd wants Bank of America to stop treating it like cattle — but the chances of that happening are dim, judging from the now-notorious recent interview with Merrill Lynch president Andrew Sieg.

In a 75-minute talk with recruiter Mindy Diamond in January, Sieg declined to acknowledge, much less address, widespread advisor dissatisfaction on issues ranging from time-consuming compliance protocols, onerous growth targets and constrictions on Merrill advisors’ autonomy and ability to serve the client.

Rather, Sieg seemed to take a “nothing to see here” approach, saying he saw “enormous contentment” among advisors, with any trouble areas being “momentary” and “transitory.” Sieg pegged Merrill’s advisor defection rate at 4% to 5%, putting it in line with other wirehouses, and attributed most advisor moves to the lure of signing bonuses after the expiration of 10-year deals. He blamed BofA-generated bureaucracy on the wider regulatory environment and dismissed advisors’ concerns of a deteriorating Merrill culture as nostalgia for a past that never wholly existed in the first place.

Strikingly, Sieg, who is also a member of parent Bank of America’s executive management team, delivered a hard “no” to Merrill establishing an independent unit for its advisors to affiliate with, as firms like Wells Fargo, Raymond James and Ameriprise have profitably done in years past.

The executive’s comments drew immediate and irate responses from current and former Merrill advisors.

“So arrogant management thinks the bank is responsible for growth, not the FA’s? Nothing new there,” one comment in an AdvisorHub story headlined Don’t Blame the Bank, Merrill Boss Says, read.

“One day, I woke up and found that 70% of my time was spent fulfilling whatever bureaucratic mandates that they could dream up. It was almost as if they TRIED to make it miserable,” read another.

Merrill Loses $4 Billion to Celebrate President’s Weekend 

In a move similar to June 2021 when Merrill Lynch lost three teams to Rockefeller Capital Management worth $12 million in revenue, three teams departed once again prior to the 3-day weekend, taking over $15 million in revenue with them. The seven brokers who left represented 134 years of combined experience with Merrill.

The largest team departing Merrill was the Jones Connolly Group based in Florida, producers of $10.4 million, managing $2.5 billion in assets. The team will open a new office in Orlando; advisors are Garrett M. Jones (21 years at ML), Sean P. Connolly (13 years at ML), Gregory H. Pollock, and Phillip T. Dobbs along with seven support staff. Mr. Jones and Mr. Connolly have been frequently recognized on the Forbes “Best in State” advisors list. 

The other team moves included Trent Cowles; a $2.7 million producer based in Indianapolis who’d had a 30-year run at Merrill. Mr. Cowles manages $450 million in assets and moves along with two support staff. Paul Leach, based in El Segundo, California took his $2.4 million trailing to Rockefeller as well after 15 years with the firm. 

Lastly, after 12 years at Merrill, Len Mangiaracina, a $3.1M/$400M  SVP who has a very sophisticated CIMA-based practice in North Bethesda, Maryland, departed for Morgan Stanley. He was recruited by Brandon Wiggins who is a rising star at Morgan Stanley, who has taken a sophisticated approach to recruiting and growing a major presence in his region. 

Rockefeller has 91 private wealth management teams under the leadership of ex-Morgan Stanley President Greg Fleming. Why the move under this timing? Even though advisor’s might have missed a vesting of restricted stock units’ moment at Merrill, the 3-day President’s weekend allows them more time to contact customers in the transition while former colleagues are out of the office presumably. Over the last five years, Merrill’s focus has been on hiring newbie recruits without experience whilst pressuring seasoned advisors to adapt to the shifting agenda and culture under Andy Sieg or be out. 

On the question of attrition out of Merrill in January, Andy Sieg stated, “half of those who have left in recent years have been serial career movers while others have left because they could not handle compliance requirements or for offers that defy any rational economic analysis.” Of course, this isn’t true and is Mr. Sieg just blowing more steam not truth. 

If Merrill advisors were not that successful in moving their assets, then these firms would not be raising their offers. The packages teams are receiving in the moves are extraordinary, thus forgoing a potential payout is worth it.

Merrill Can’t Stop the Bleeding – Another $3 Billion Gone in the First 3 Weeks of 2023

The deal with bloodletting is that it is supposed to cure a problem, is that what Andy Sieg thinks he’s doing? After massive AUM and revenue losses in 2022, Sieg is starting the year off with a bang with another $3 billion gone in just the first few weeks of 2023. I’m sure the podcast with Mindy helped.

The teams. David Mohamed and Justin Merola from Wellesley Hills, MA took their $8 million in revenue to First Republic Bank, perhaps the direct bank referrals are not only useful but lucrative. Alex Ladage, David Landon Smith, and Jorge Garcia in Austin, TX moved their $7.5 million in revenue and $900 million in AUM to Rockefeller Capital Management. Mark Karstaedt, Daniel Zomback, and Raymond Lin of New York, NY moved $2 million in revenue and $400 million in AUM to JP Morgan Advisors. Jeffrey Klinger and Bradley Quinn in San Francisco, CA moved $7 million in revenue and $1 billion in AUM to UBS. While two of these moves are still too big financial firms, what is clear is that the exodus at Merill just won’t stop – no matter where it is to.

Roger Gershman of the Gershman Group worked with Mr. Klinger at Credit Suisse, he stated “Jeff is a top-notch advisor, Merrill should be ashamed to put pressure on the best advisors to leave for other shops.  Best of luck to all the teams leaving Merrill.”

As we’ve covered extensively, advisors are leaving Merrill in droves for a number of reasons from grid and bonus cuts to creepy culture, to pushing products the bank wants sold, to playing to the lowest common denominator with firm established model portfolios. If advisors don’t fit the model, the firm wants them out and has made it downright impossible for many to continue their practice in the way they see fit. It will be interesting to watch the numbers to see just how much Merrill will lose in 2023. Any guesses?

The “Candid” Interview You Wish You Heard

A few days ago Mindy Diamond hosted a “candid” interview with Andy Sieg, The President of Bank of America Merrill Lynch. In that interview many were disappointed with the questions asked and more importantly the answers. In this episode we answer without bias – understanding what the firm is actually going through as we speak with many advisors, managers and those close to the situation.

Roger Gershman is the CEO of The Gershman Group and has a wealth of experience in financial advising and asset management. Roger brings a unique advantage to the world of financial services recruiting. Having spent twenty-five years himself as a financial advisor at Hambrecht & Quist, UBS PWM, and Credit Suisse, Mr. Gershman brings a unique perspective to the recruiting and consulting world of financial advisors. He has built profound relationships through the generations and has fostered deep relationships with his clients on both the broker and management sides. He upholds the reputation of The Gershman Group by continuing to provide valuable consultation and advice to transitioning financial advisors.


Originally published on: https://thegershmangroup.com/the-candid-interview-you-wish-you-heard/


0:00 Intro

0:24 Why Would Andy Speak With A Recruiter?

1:29 Is He The Culture Bearer of ML?

3:18 Ultimate Culture Degradation

5:30 Why FAs Are Leaving? 7: 57 The Model is Broken

11:10 The Shift to Private Banking

14:32 End of Entrepreneurship

15:08 Why Restart Recruiting?

17:36 “Join a Team!”

20:33 What ML Advisors Can Expect?

22:38 It’s Your Clients (.)

23:26 Closing Remarks

First Republic Starts 2023 with a Bang

First Republic has just signed three big-name wealth management teams to its roster in one week’s time to kick off 2023. First, an $11 million in revenue/$1.8 AUM BNY Mellon Boston-based team led by Brenda Travaglini, Michael Corcoran, Dennis Murray, and Dan Gallagher along with three staffers. All four with substantial years under their belt with BNY, Travaglini with 37 years, Corcoran with 34 years, and Murray and Gallagher each with 20 years at the firm. To leave the firm with this many years of service and a salary plus bonus must have been for something special as we’ll get to in a moment.

The second move, is a four-person Morgan Stanley team led by Eric Yamin with 35 years in the business, and Keith Caparelli with 10 years. The $7 million revenue/$ 700 million in AUM team serves clients in New York and Florida. The third movement, the $8 million Wellesley Hills, Massachusetts-based Mohamed-Merola Wealth Management team left Merrill Lynch also for First Republic. Derek Mohammed and Justin Merola each had been at Merrill for 7 years and previously were both at UBS and Morgan Stanley respectively.

Roger Gershman of the Gershman Group, familiar with the teams stated, “First Republic is undeniably a great consideration for advisors on the coasts serving the UHNW client with private banking needs (including direct referrals), the extremely competitive compensation plan is clearly luring advisors to the firm, one after another.”

What is behind these moves and First Republic’s ability to now have amassed 200 top advisors representing over $195 billion in AUM? In 2022 alone, First Republic recruited $12 billion in new AUM.

The upside?

One, First Republic is a premier private bank with pristine UHNW relationships. The bank has been able to negotiate the banking – wealth management relationship well. Some might see this as a negative if they want to be separated from the pressures that come with a bank, some view it as a positive.

Two, the First Republic model allows some freedom and is more entrepreneurial in nature than the firms advisors are leaving yet it isn’t a “go it alone” setup for advisors who don’t want to establish their own RIA firms.

Three, the bicoastal footprint of First Republic works for advisors serving clients in those areas, it might not serve advisors well in the rest of the country.