- Issues in Merrill Lynch’s massive pipeline for financial advisors are weighing on trainees’ morale.
- Advisors in training have faced months of mixed messaging about prospecting, people say.
- Bank of America’s wealth management unit is among the largest in the US, overseeing trillions.
- See more stories on Insider’s business page.
Restrictions on Merrill Lynch Wealth Management financial advisors in training are stretching into a ninth month and have shown no signs of lifting.
An unprecedented pause on reaching out to prospective clients has hurt trainee morale and added frustrations in a program where building a book of business is critical to success. The firm has fired a handful of trainees for violating the terms of the pause since it went into effect last July.
That’s cast a shadow on Merrill’s key pipeline for new advisor talent at a time when the wealth industry is facing a cliff of retirements.
Instead of focusing on building up their client books, trainee advisors are spending their days in a cycle of virtual training sessions and having their outbound calls monitored, which had not been the case in previous years.
That’s left a lot of downtime, with one trainee filling their time with other activities like day trading in their personal accounts.
Merrill instituted the ban preventing its force of 3,000 trainees from “prospecting” with potential clients last summer. The firm said at the time that it would focus on training for best practices and how to use tech for reaching out to prospective clients.
The pause went into effect as Merrill grappled with a raft of violations related to prospecting and cold-calling people on do-not-call lists, Insider first reported last August.
Soliciting business by contacting people who have requested that they be placed on federal do-not-call lists, maintained by the Federal Trade Commission, can be costly. In 2015, Bank of America agreed to pay $400,000 as part of a settlement with a New Hampshire regulator over allegations it reached non-clients who were on do-not-call lists, InvestmentNews reported at the time.
Employees in the 3-½-year program are now frustrated because of what they describe as micromanagement and mixed messages surrounding the pause timeline. Trainees are permitted to contact and service their current clients or clients on their advisory teams, and are allowed to receive inbound calls from people who could be clients. They are not allowed to use lead lists or make calls not preapproved.
Merrill is monitoring trainees’ every phone call, and has Ernst & Young auditing call logs
Sources with direct knowledge of the program, who spoke on condition of anonymity to speak freely and whose identities are known to Insider, said supervisors were monitoring and questioning trainees’ every phone call to ensure they’re compliant with terms of the pause. The firm has also hired Ernst & Young to examine trainees’ phone-call records, a person familiar with the matter said.
At least one trainee has sought counseling to deal with the emotional toll and frustration of not being able to grow their practice during what’s already been for many a prolonged period of isolation. One person familiar with the matter said trainees, who are salaried until they can start working on commission like full-fledged financial advisors, are participating in training sessions throughout the day but are not growing their businesses.
Supervisors have messaged periodically since the pause went into effect last summer that it would be lifted, people with direct knowledge of the program said, but that those dates — possibly by fall, and then possibly by year end — have come and gone. Some are turning to online message boards to source information about the status of the program.
A Merrill spokesperson said the prospecting pause remains in place while leadership of the firm’s recently reorganized advisory division, where the program sits, refines its strategy, and that the firm will have an update on the advisor development program in the “not too distant future.”
Merrill has said it is moving from trainees’ reliance on cold-calling, increasingly considered an outdated way of reaching new clients. The firm has also said it has encouraged more team-based work for newer advisors than becoming sole practitioners, which could cut back on the need for cold-calling.
Full-time financial advisors have also been disciplined for outreach-related violations. The firm had questioned a former advisor in Arizona over his text messages, emails, and phone calls to gauge whether his communications were compliant, Financial Planning reported as part of an investigation in February. The advisor and a trainee development coordinator in the same region were fired over the matter in 2019, AdvisorHub reported.
A newly reorganized division, and the program’s future
For Merrill, among the largest and most storied US wealth managers with $2.8 trillion in client balances at the end of 2020, the advisor training program is in many ways its future. In recent years the firm has backed away from hiring experienced advisors and teams of wealth advisors who can often command large signing bonuses to join rivals.
Holding on to young advisor talent has never been more pressing, too, as a wave of aging financial advisors are expected to retire in the coming years with more advisors leaving the business than analysts expect to enter it.
Still, the pause has complicated what has traditionally been part of the fabric of building a wealth management business: networking and finding new clients.
Jennifer MacPhee, the former Financial Advisor Development Program head, told associates last July that they were not allowed to use lead lists like ones created by lead-generation company ZoomInfo; make calls that were not preapproved; or use LinkedIn’s InMail feature to contact prospective clients, according to a copy of the memo obtained by Insider at the time.
“Failure to comply with these temporary guidelines will be considered a policy violation resulting in disciplinary action,” MacPhee wrote, adding they would be allowed to serve their clients and interact with prospective clients who contacted them.
MacPhee, a longtime executive of the firm, left Bank of America’s wealth management business several weeks after the pause went into effect.
Last September, the firm restructured its training infrastructure. It folded the training program into a newly created advisory division within Merrill led by company veteran Eric Schimpf, who was also named cohead of advisor development for Bank of America with Matt Gellene. The division was created to focus on developing early-career advisors across Merrill.
The business has made other adjustments to the training program as the pandemic upended work and life. Last spring, Bank of America shifted 3,000 employees, including 650 financial advisors in training, from their everyday assignments and into positions to help field what was an onslaught of customer calls.
Tips or feedback? Contact this reporter at (646) 768-4711 or email at rungarino@businessinsider.com or rungarino@protonmail.com.
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