We all know that Merrill Lynch and Bank of America were a shotgun marriage. Bernanke and Paulson were holding the proverbial shotgun to Mr. Lewis and Mr. Thain's heads and, poof, we have a humongous financial institution. The Merrill brand as a retail brokerage operation remains strong (I'm picturing that bull wandering through the china shop in that famous commercial) even as the Investment Bank is rebranded Bank of America-Merrill Lynch (how long before the Merrill name is dropped from those IB business cards?).
However, at the high end of Wealth Management, B of A has a serious integration problem. Merrill has long had Private Banking and Investment Group (PBIG), a separate group of offices for Advisors who exclusively handle accounts with $10 million in assets and above. B of A has the U.S. Trust business, which has been merged with its own legacy Private Banking business which also handles the investments for High Net Worth Clients.
Surprise, surprise! They both are soliciting the same clients!
U.S. Trust reports into Keith Banks, an executive with long standing ties to Brian Moynihan, the new CEO of B of A. PBIG reports into John Thiel, who reports up to Sallie Krawcheck, the executive in charge of all of Merrill Wealth Management. One PBIG Advisor told me: “My clients are getting called by the US Trust people who are actively competing for my best accounts. It's a competitive enough environment without being undermined by your own firm. Senior management is going to make some tough calls. In the meantime, those of us in the field look petty and unprofessional to the best clients in the firm.”
While the Investment Bank folks, already merged, happily talk about “homogenization” and “shared services”, the PBIG folks wonder if Sallie Krawcheck has the pull within the Bank to protect their turf. Ms. Krawcheck, when in the same role at Citi, had similar conflicts boiling beneath her between high end Smith Barney advisors, branded as Citi Family Office, and the Private Bankers from the Citibank side. As Citi fell apart, and Ms. Krawcheck left, that conflict was not resolved until Smith Barney was spun off to Morgan Stanley.
Will B of A be able to make the tough management calls necessary to resolve this? If not, they risk alienating their most productive Advisors and their best clients. Hopefully they will start with the idea that they need to do what's best for the client. If not, or if they stay in this (wonderful) limbo, my phone will continue ringing.
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