Merrill’s Sieg Sees Broker Growth Goals Beyond Five New Households
Merrill Lynch’s push this year to have advisors grow their books has put the campaign to cross-refer customers to other parts of Bank of America somewhat in the background, the firm’s wealth management head said at a conference this week.
The average Merrill broker, who serves around 150 clients and had been opening fewer than 2.5 new accounts annually, has the capacity to add more than five a year on a gross basis, Andy Sieg said at Barclays Global Financial Services conference in New York on Wednesday. The firm’s nearly 15,000 brokers had been bringing in less than one new household account on a net basis after defections were considered, driving Sieg to introduce myriad bonuses, penalties and recognition trips in the past year.
His incessant push for growth has somewhat deflected attention from Bank of America’s attempts to have them prune their books by directing smaller accounts with whom some brokers have had long relationships to Bank of America’s more self-directed, no-frills Merrill Edge offering.
“We’re at a strategic inflection point,” Sieg said. “We’re moving from a phase where ‘shrink to grow’ was the right strategy to where ‘grow to grow’ is going to be the right strategy.”
Merrill brokers added a gross 4.6 households on an annualized basis in the first half of 2018, close to Sieg’s target of five new accounts per year that he outlined last October.
The top 400 growers in the firm’s eight-month Excellence in Growth recognition trip program brought in 15 new accounts on an annualized basis in the first half of the year, a sign that the rest of the field has much more room to grow, he said. Merrill has renewed the trip incentive, which bases awards on new asset and account growth between July 1, 2018 and February 2019.
Sieg hinted to his audience of institutional investors that he is aware some brokers consider efforts to offload smaller accounts and focus on new prospects an affront to their ability to serve existing clients.
“Advisors can use tech to grow the business without sacrificing our ability to stay in touch and contact and serve clients,” he said, referring to new smart data and managed account-monitoring tools Merrill has been unveiling to help brokers manage their practice.
The highest increase in new households in the initial stages of the programs have been among brokers with 30 years or more of industry experience, a group that had been laggards in expanding their already profitable practices.
“At Merrill Lynch and across the industry, the more tenured advisors to a large extent have stopped driving client acquisition, which is very unfortunate because our longest-tenured advisors are best positioned to drive client acquisition,” Sieg said.
The new programs have given veterans a “newfound focus” on growth, Sieg asserted.
The sticks SIeg has introduced into compensation plans also may be driving results. About one-third of Merrill’s brokers had money clawed back last summer for failing to be on track to hit the comp plan requirements of bringing in three new households by the end of the year and growing assets by 2.5%.
In terms of referrals to Bank of America, Sieg told investors in the bank that Merrill is still doing its part to grow business at sister companies. The Global Wealth and Investment Management division that includes Merrill Lynch Wealth Management made 77,000 referrals to the bank in 2017 and received 44,000 in return, according to Sieg’s presentation.
The majority of the outward Merrill referrals, 53,000, went to the consumer bank for deposits, cards, mortgages, and self-directed investing under Merrill Edge. The consumer bank sent back 31,000 referrals of prospects suitable for advice from brokers, it said.