Grumbling herd complains about cross-selling

Merrill brokers say pressure mounting to promote BofA cards, loans, mortgages

May 8, 2011 @ 12:01 am

By Andrew Osterland

Whether Merrill Lynch brokers and Bank of America bankers can live happily ever after — and produce greater profits as a result of their marriage — is being put to the test at the nation's largest financial institution.

Two years after Bank of America Corp. rescued Merrill Lynch & Co. Inc. from imminent bankruptcy, the bank has combined the corporate and investment banking divisions of the two firms.

Now Sallie Krawcheck, head of Bank of America Merrill Lynch's Global Wealth Management division, expects the nearly 16,000-person Merrill thundering herd to do its share. That translates into Merrill brokers' being encouraged to sell BofA mortgages, checking accounts and credit cards to their clients.

The pressure is ruffling some feathers in the financial adviser ranks.

“They are really starting to push now,” said one disaffected broker, who asked not to be identified.

“We used to have intelligent meetings about client needs. Now we get bankers just pushing credit cards and checking accounts on us,” the broker said.

There is more pressure at some branches than at others, according to Ron Edde, an executive recruiter in California.

“But the No. 1 complaint I get from Merrill brokers is that they're being pushed to sell banking products,” he said.

“Our advisers have absolutely no quotas on banking solutions,” said BofA spokeswoman Selena Morris.

For some advisers, including David Leland, a Merrill Lynch adviser, cross-selling bank products isn't an imposition but an opportunity.

Formerly a broker with Advest Inc., which Merrill Lynch acquired in 2005, he said that access to Merrill's technology and array of investment products helped him expand his business beyond stocks and bonds. Adding banking products has expanded it even more, Mr. Leland said.

“I've had eight clients refinance significant mortgages, and I have many others interested in checking accounts and [certificates of deposit]. Fifty percent of Americans are doing business with Bank of America in some aspect,” said Mr. Leland, who increased his production 35% last year and 22% so far in 2011, and sees the addition of banking products as “a big plus.”

It is clear, however, that not all Merrill Lynch brokers are pleased about closer ties to the bank. (For a look at how advisers at wirehouses and big regionals rated their satisfaction levels, including Merrill, click here.)

“I built a pond to fish in, and I put fish in the pond. Now the bank comes along and wants to fish in my pond,” said one longtime Merrill Lynch broker, who asked not to be identified.

Another broker who asked not to be identified said that he worries that he risks losing clients if the bank doesn't execute on its end.

“The bank has a profitability problem in its mortgage and credit card businesses, and they're looking to private clients at Merrill to enhance their revenue,” this broker said.

“The BofA/Countrywide mortgage division is in such disarray that I don't want to send clients that way. I think 9 out of 10 Merrill brokers would say the same thing,” the broker said.

“The financial supermarket model hasn't worked in the past and was abandoned until BAML and Wells Fargo adopted it as an accidental strategy,” said Alvi Abuaf, head of the North American Wealth and Investment Management Group at consultant Capco. He said new forces are driving the model.

“As clients retire and enter into a wealth distribution phase, they need more banking services than they did before. There may be product push going on at these banks, but there's also a pull from the market,” Mr. Abuaf said.

For many at Merrill Lynch, however, the issue isn't so much the pressure to cross-sell but rather the time that brokers now must spend on non-investment-related minutiae.

“I have no problem looking at banking products on behalf of clients, but I don't want to spend my time on late credit card payments or checking fees,” said Joshua Brown, an adviser who worked for Banc of America Investment Services before the merger and then with Merrill Lynch. “I want to focus on financial planning.”

Mr. Brown and partner Ronald Rienas, who managed $250 million in assets and produced more than $2 million in revenue for Merrill Lynch, recently left the firm for Ameriprise Financial Inc.

Although top Merrill producers and teams may get a free pass when it comes to selling banking products, brokers in the middle and lower tiers of production are likely feeling the heat.

“This is a crucial year for the bank,” said Alois Pirker, a senior research analyst at Aite Group LLC.

“Merrill Lynch is turning around and the dust is settling from the financial crisis. The top retail bank in the country is working with the top retail broker,” Mr. Pirker said.

“If they don't have success cross-selling services, people will start calling for a breakup of the merger,” he said.

E-mail Andrew Osterland at aosterland@investmentnews.com.

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