Merrill Lynch Building Up Broker-Training Program
February 03 2010 - 3:48PM
Dow Jones News
Bank of America Corp.'s (BAC) Merrill Lynch plans to inject some
new blood into its brokerage force with hundreds of rookies this
year.
With a new head of its financial adviser-training program,
Practice Management Development, or PMD, Merrill is ramping up its
pipeline for new talent, amid a potential boost in its overall
broker headcount.
The Financial Times reported Wednesday that Bank of America is
targeting a 2,000-broker increase at Merrill's thundering herd of
15,000 advisers. Such a boost would bring Merrill closer to its
main rival, Morgan Stanley Smith Barney, which boasts some 18,100
advisers.
A Merrill Lynch spokeswoman declined to comment specifically on
the reported plan to increase Merrill's broker count, saying "the
bulk of our investments in our business are in capabilities for
clients and existing advisers." She added that the firm looks to
"add quality advisers and bankers, in particular through our
training program."
It's likely that any increase in Merrill's headcount would come
from adding not only trainees, but experienced advisers, which the
firm has actively courted again since last spring. The firm offers
some top-tier brokers 120% of their annual production to join
Merrill Lynch from a rival.
Still, for Merrill and its brokerage rivals, training programs
are launching pads for many advisers, some of whom will become
top-producers in the future.
"Of all the firms, Merrill has been the most organically grown,"
said Bill Willis, chief executive of Willis Consulting, a
recruiting firm focused on the financial services industry.
Mark Benson, head of the U.S. Advisory Practice Management
Development program for Merrill Lynch, said in an interview, "if
you look at the revenue for the advisory force, 80% is from
financial advisers who were trained or hired at the firm."
Benson became head of PMD in August, after a nine-year career at
Bank of America. He recently was head of Bank of America Investment
Services, which was integrated with Merrill Lynch at the end of
October.
Benson says PMD is well regarded throughout the brokerage
industry as it's "the longest running training program on Wall
Street, since the 1940s."
Advisers in PMD must complete a roughly 42-month program, in
which they take part in various online courses and webinars as well
as in-house training. Within that time, brokers spend 36 months in
a production phase, where they are evaluated, in part, on how much
they produce.
Merrill has shortened the duration of the overall program,
Benson says, but at the same time, increased its content. This
change gives trainees more time to complete additional testing and
other assessments, he said.
The increased focus on trainees at Merrill is in sharp contrast
to the hard times that rookie brokers faced in the industry in late
2008. A plunging stock market made it difficult for these advisers
to meet production goals, and many were laid off as their firms cut
costs.
Benson says Merrill is committed to giving trainees, many of
whom are second-career professionals, the best chance to succeed
from "peer-to-peer mentoring" with experienced advisers. Rookie
brokers also have the option to join a team of veterans, which
eases in their transition to the industry.
In additional to Merrill, other firms, including Wells Fargo
& Co. (WFC), are putting a renewed focus on training and
developing new advisers.
A Wells Fargo Advisors spokeswoman says the firm is expecting
40% of the new advisers to be hired to join teams and 60% to build
their own book, adding, "our average trainee has 16 years of
professional experience."
She says Wells Fargo added 1,240 new financial advisers, or
those with under five years of experience, in the last five
years.
A Morgan Stanley Smith Barney spokeswoman reiterated comments
from Morgan Stanley (MS) Chief Executive James Gorman at an
investor presentation Wednesday. Gorman said the brokerage expects
to have 17,500 to 18,500 brokers this year, with a training program
to support that range.
A UBS AG (UBS) spokesman declined to comment for this story. The
firm's new head of Wealth Management Americas, Robert McCann,
recently named a leadership team and is expected to design a plan
to return the brokerage to profitability.
-By Brett Philbin, Dow Jones Newswires; 212-416-2173;
brett.philbin@dowjones.com
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