Merrill Lynch winning advisers as recruiting tides shift

The wirehouse has become more aggressive and has attracted some big teams, though critics say such deals aren't a good measure.

Recruiters often describe brokers’ movement between firms as coming in waves, and the tide seems to be shifting in Bank of America Merrill Lynch’s favor.

After the firm lost some $18.6 billion in assets in 2014, according to InvestmentNews’ Advisers on the Move database, the firm is increasing its head count and reeling in a number of large teams. In the third quarter, for example, the firm brought in a $1.3 billion team of four advisers from competitor wirehouse UBS Wealth Management Americas. Overall, it recruited 12 teams and about $3.8 billion in assets — not inclusive of those who left — during the quarter, according to the database.

‘VERY AGGRESSIVE’
“They’ve become very aggressive,” said industry recruiter Rick Peterson of Rick Peterson & Associates. “And the bottom line is they have been attracting more teams to even out the numbers.”

(See InvestmentNews’ full Advisers on the Move database)

Mr. Peterson said he has placed teams at Merrill Lynch in the past but does not have a contract with the firm or recruit on its behalf.

In the firm’s most recent public filings, from the second quarter of this year, Merrill Lynch had 14,370 advisers, the result of several consecutive quarters of improvement in head count.

Several recruiters said that part of the growth was due to the fact that the firm had become more competitive in the bonuses it was willing to pay new recruits to move over.

“Big teams are certainly a target, and offers have become very aggressive in terms of overall numbers,” said recruiter Mickey Wasserman of an eponymous firm, which has a contract with the firm. “They’re competitive with the likes of UBS and Morgan Stanley.”

150% OR HIGHER
Mr. Wasserman declined to provide specific numbers for deals he has seen, but said the industry average can be around 150% cash upfront, and deals can be higher for larger teams with a clean record. Mr. Peterson said deals vary too much among advisers to provide a specific number.

A spokeswoman for Bank of America Merrill Lynch, Susan McCabe, declined to comment on deal sizes, but said the firm had brought in 150 veteran advisers so far in 2015. That number is higher than last year, although Ms. McCabe was not able to provide a specific figure for 2014 recruiting.

(More: Breaking away for the wrong reason)

Executives, including Bank of America chief executive Brian Moynihan, have noted that the firm has been focused on recruiting and training, even when those efforts result in a drag on profit numbers.

In addition to the $1.3 billion UBS team, for example, Merrill Lynch brought in a number of large teams from Barclays PLC’s U.S. wealth management unit following the announcement it was being acquired by Stifel Financial Corp.

Mr. Peterson said the firm’s managers also are becoming more adept at managing the conversations around Bank of America’s role in the day-to-day lives of Merrill Lynch brokers. A common complaint noted among many who left was the increasing ties between Bank of America or having to direct clients with under $250,000 to Merrill Edge, a more self-directed option under the consumer bank.

“It’s the very first question that every broker that I know of asks: How much involvement is there with Bank of America?” Mr. Peterson said. “And the pat answer is ‘very little.’”
LOVE IT OR LEAVE IT
Most brokers already knew about the banking unit’s role in the brokerage going in, and those who did not like it could have already left Merrill Lynch, Mr. Peterson noted.
(More: Merrill fires back at $870 million defectors)
Still, not all recruiters buy into Merrill Lynch’s recruiting renaissance.

“I think it’s just a matter of how you want to look at the numbers,” said Danny Sarch, an industry recruiter with Leitner Sarch Consultants. “Their inability to differentiate themselves is reflected in the fact that [the cost of] deals are going up.”

Indeed, Bank of America lost a couple large teams in the quarter, including a $3.3 billion private banking team in Newport Beach, Calif., who left to start their own firm.

Ms. McCabe said attrition was at “historic lows.”

Ron Edde, a recruiter with Millennium Career Advisors, said he still wasn’t convinced.

“I haven’t seen a market trend of the Red Sea reversing and the market folding in on itself and people going to Merrill,” he said.