In late August, Merrill Lynch rolled out Project Thunder, a two-month campaign that appeared to be aimed at staving off increasing adviser attrition and addressing the frustrations of those still at the firm.
In a much publicized statement, Andy Sieg, president of Merrill’s Wealth Management unit, described Project Thunder’s goal as “to make it easy for all Merrill employees to do business, for our advisors and their teams to grow and achieve success, and to deliver for clients through extraordinary service and capabilities.”
With its new commitment to listen to its advisers, Merrill introduced changes that include functional updates to the Merrill One advisory platform, a reduction in turnaround time for clients looking to join parent Bank of America’s donor-advised funds, the addition of mortgage lending specialists to alleviate bottlenecks, and other procedural updates. Plus, the firm also offered brokers greater leeway in sending greeting cards to customers and prospects — which likely was one of the most commented on aspects of all.
At the same time, Sieg has been reassuring brokers in the field that he’ll limit compensation changes for 2022. In fact, in a town hall meeting held last week, it seems like they’re keeping their word.
But will the campaign work to halt the tide of attrition? Put another way, is it too little too late?
I’ve spoken with many Merrill advisers since Project Thunder was announced. The common theme they shared is that despite this effort, leadership is still quite disconnected from their real concerns.
So as the program rolls on — now with monthly changes rather than weekly — here’s what I would do to attempt to reinstill loyalty:
1. Stop withholding the first 3% of monthly revenue that advisers generate.
This is perhaps the most contested issue among the field, announced in 2019 to rein in compensation costs that outpaced revenue increases. Certainly, no one likes to have their comp decreased or withheld, and in this case, it simply felt like a move to add to the bank’s bottom line.
2. Ease up on the push to cross-sell Bank of America products.
Pressure to “sell” anything runs counter to the notion that advisers know what’s best for their clients. Mandates such as this indicate to advisers that the bank wants to control their behavior.
3. More carrots, fewer sticks.
Under the growth grid system introduced in 2018, brokers must add at least three net new households to avoid a 100-basis point reduction in their payout and a percentage point if they do not grow customer assets by 2.5%. Instead of rewarding advisers for doing what’s best for clients, this methodology enforces growth for growth’s sake and could encourage advisers to act in ways that are not necessarily in clients’ best interests.
4. Stem the acceleration of ever-increasing bureaucracy.
Advisers report that it’s significantly more challenging to get things done. Plus, they worry that these inefficiencies are negatively impacting the morale of support staff assigned to deliver an extraordinary client experience. This would also help to reduce the feeling of the “bankification” of the firm.
5. Give advisers more ownership.
While Merrill remains a member of the Protocol for Broker Recruiting for now, it has continued to whittle away at the portability of advisers’ books. More stringent requirements for trainees and strict nonsolicit clauses on bank-referred customers and inherited accounts make advisers feel less like the firm is on their side, replacing a culture rooted in an entrepreneurial wealth management mindset with one that manages to the lowest common denominator.
6. Offer more favorable Client Transition Program terms with greater transparency.
Merrill’s retire-in-place program can be a compelling option, rewarding advisors for their life’s work should they desire to retire from the firm. But advisers and outside attorneys familiar with the agreement report that CTP is far more restrictive than first thought, containing onerous post-employment clauses that further deprive successors of optionality and control.
For example, in a recent podcast interview with Tom Lewis, a certified civil trial attorney at Stevens & Lee who works in this area, Lewis noted that, “The other broker-dealers have restrictions [in their agreements], but Merrill has a two-year noncompete. In other words, if the senior adviser is part of a team and the team decides to make a move while the transition payments are still being made by the receiving team, the senior adviser is effectively stuck at Merrill for a period of at least two years.”
To be sure, Merrill is a world-class firm with a strong platform, technology stack and brand respected more than most in the industry.
So for some, the firm’s acknowledgment of a problem and its attempt at change may be enough to alleviate concerns. There are also plenty of loyalists, dyed-in-the-wool Merrill lifers who have built great books over decades at the firm and plan to end their careers there. And there are certainly others who would much prefer the path of least resistance: that is, to stay put and take a “wait and see” approach.
But if moves in recent weeks are any indication of what we can expect, we’re likely to see continued attrition.
Merrill advisers desire greater freedom in how they serve clients and grow their businesses, and the firm has a strategic goal to better integrate the brokerage within the much larger bank. No doubt, there’s a good business strategy behind its actions, but is there still room for an entrepreneurial-minded adviser within the greater organization?
A storm is indeed brewing. It will be interesting to see which way it turns next.
Mindy Diamond is founder and CEO of Diamond Consultants, a financial recruiting firm.
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