WASHINGTON, D.C. -- It's a myth that large wealth management firms are losing advisers to independent firms.

At least it's a myth at Merrill Lynch, according to Sallie Krawcheck, president of Global Wealth and Investment Management at Bank of America.

Last year, Merrill Lynch only lost 36 of its advisers to independent firms, she told attendees of the General Membership Meeting of the Investment Company Institute Thursday afternoon.

In the same period, it picked up 25 advisers from independents.

That means it had a net loss of 11 advisers. Out of a total of 15,500 advisers 

That works out to a loss of seven hundredths of one percent of its advisers.

More importantly -- at least to a wealth management firm's bottom line -- Merrill Lynch pulled in more client money with the 25 advisers it recruited, than left it with the 36 departees.

There's also a myth that clients are leaving large wealth management firms in droves, she said. In Merrill's case, it's experiencing "low single digit attrition."

Other myths: 

  • Wealth management firms set goals for the amount of products they will "cross-sell." Not so, she said. At Merrill, customer satisfaction is the measure of success for advisers, not how many products can be sold. And the firm sold off its proprietary asset management business, as a proof point. 
  • Short-term transactionally oriented relationships rule. Actually, Merrill Lynch advisers on average have 13 year relationships with their clients. One-fourth have relationships lasting more than 20 years.
  • Pricing pressures are crushing wealth management bottom lines. The truth: Return on assets have been flat for 15 years now. In that span, Merrill brokers first became investment managers, then wealth managers. Adding value has fully offset any pricing pressure, she said.
  • It's all about investment performance. Clients rank it seventh highest on their list of criteria. The top priorities: Providing responsive service and solving problems. 
  • Younger investors are more risk tolerant. People 25 to 35 have only known down markets. They are almost as risk averse as pre-retirement investors.

Other Krawcheck pet peeves: the use of the word "cross-selling," which she despises, and even "retail distribution.
"Cross-selling,'' she said, sounds like something "we do to you, rather than for you." 

And "retail distribution" sounds like a system for just pushing products at people.

She prefers that Merrill Lynch and its partners talk in terms of "private client solutions" instead.






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