Merrill Mini-Market Strategy Takes Root, Asset Growth Nears Rest of Firm
About six months into launching a “community markets” strategy aimed at improving lagging numbers in offices far from big cities and Bank of America branches, Merrill Lynch is internally proclaiming modest success.
Growth of new client accounts at the just over 100 community offices in locations from Guam to Allentown, Penn., is up about 60% in the first half of 2018 from the 2017 period, Merrill officials told the approximately 1,650 Thundering Herd members who have been corralled into the community unit on an internal call last week.
While new-client growth in the small markets still trails the broader Merrill wealth franchise, it reverses an attrition of household accounts in the small offices in the first half of last year, said a person familiar with the metrics.
Community markets brokers, on the other hand, boast a better rate in retaining existing clients than the rest of the firm this year, the person said, and retention of advisors in the branches has come out of the doldrums to match the low-single-digit rates of the rest of Merrill Wealth.
In another metric aimed to please their Bank of America bosses, Merrill executives told the community brokers that their referrals of customers to bank branches for mortgages and other bank products increased some 160% year-to-date over last year. The combination of new client assets and loans generated at the small branches are in the hundreds of millions of dollars this year, the person familiar with the numbers said.
Merrill Lynch Wealth Management head Andy Sieg has unleashed a host of compensation and sales-management strategies to improve new account, asset and bank referral rates among the firm’s almost 15,000 brokers since he took the reins 18 months ago.
In announcing his plan to give more training and sales support to brokers in small offices, most of which have fewer than ten advisors, Sieg anticipated that the “community” structure would apply to about 150 offices where there were no Bank of America branches and which were 30 or more miles from larger Merrill offices. The project has crystallized at about 105 branches, as community markets’ managers work out ways to consolidate and oversee the offices. (Contrary to expectations when the new strategy was unveiled, Merrill has not exempted community markets brokers from its policy of paying brokers only on household accounts over $250,000.)
In their update last week, Merrill executives said total net new assets and loans raised from clients in community markets so far this year are up about 4%, reversing a decline in the same period in 2017. The community markets program was launched early this year at four branches in northeastern and central Pennsylvania and in others across six states in the Northwest.
The community markets strategy is meant to give better training, technology and sales support to brokers in outposts that were frequently overlooked by complex and regional managers, executives said. The challenge for the unit, which is run by Merrill’s former Southwest division head Ben Prince, is to compartmentalize the brokers without making them feel like junior varsity players.
Merrill has hired ten market development managers, a new position aimed at helping brokers in the communities resolve problems and obtain resources. Most of the new managers had worked at BofA.
Dozens of community markets brokers have been given training at national meetings, including one in Orlando in March, and the firm has been sending tech experts to their relatively remote offices to train them on new WebEx and other mobile-device technology to make client presentations, share documents and participate in other innovations, they and company officials said.
Prince also has created a centralized mortgage support unit that has been deployed from BofA’s U.S. Trust private banking unit to give full attention to the community markets constituency.
The new unit, while not a geographic market under Merrill’s conventional sales management organization, has added about 60 advisors this year, said people familiar with the strategy. The vast majority come from Merrill’s training program, but a handful have been hired from independent brokerage and insurance firms, regionals and competitors such as Edward Jones that specialize in small markets.
Merrill is guaranteeing brokers hired from other firms a match of their previous year’s pay for three years, in addition to grid-based payouts on new business and some asset-gathering bonuses, said outside recruiters. The pace of hiring from other firms has not met the recruiters’ initial expectations, they said.