Merrill Lynch’s Thundering Herd is having a huge crisis of confidence.
Bank of America’s integration of the prized brokerage empire is spooking many Merrill financial advisers, who are balking at CEO Brian Moynihan’s arm-twisting corporate culture, people familiar with the company say.
The Charlotte, NC, bank’s efforts to wring profits from its Merrill unit is turning off many of the Herd’s professionals, Merrill advisers said, privately complaining that BofA’s persistent push to cross-sell banking and brokerage products is the problem.
Former advisers and industry insiders accuse BofA of tarnishing the proud Merrill brand.
The other part, ex-Merrill pros say, is a military-style management approach with an emphasis on millionaire households — a far cry from the old entrepreneurial spirit that energized Merrill before then-CEO Ken Lewis acquired it. (Merrill’s then-CEO John Thain had shopped himself to every bank over a fateful weekend during the ’08 financial crisis.)
Samuel Spanos spent 34 years as a Merrill Lynch broker. He recently quit to take his large team to Raymond James in Beaver, Pa., saying Merrill was never the same after the takeover.
His team manages about $535 million in client assets. “The bottom line came first, rather than the client,” he told The Post of his experience under BofA. “It went from ‘anything for Merrill and our clients’ to ‘everything for the bank and for management and its goals.’ ”
Spanos says BofA’s push to have advisers refer business to the bank started out as a good idea.
“But then the bank never referred any business back to me,” he said. “The straw that broke the camel’s back? We were told you can’t open an account under $250,000 — you had to send it to an 800 call center.”
And the balance sheet is beginning to show the loss of business.
Merrill, run by John Thiel, has been a strong performer in recent years for the bank. However, the fourth quarter told a different story, its wealth management earnings plunging more than 9 percent, to $706 million, from a year ago as brokerage transactions slowed.
For many of the Thundering Herd’s 14,085 advisers — which is down from 17,533 in June 2012 — BofA has crossed the Rubicon.
“That’s the rub, isn’t it? When BofA acquired Merrill, they came in and wanted bankers to sell Merrill products and Merrill advisers to sell bank products,” said industry headhunter Howard Diamond, who has recruited advisers from Merrill. “Merrill was becoming a bank-controlled firm. That was definitely the rub to the old hard-core advisers.”
Not surprisingly, teams of Merrill’s top producers like Spanos have fled to competitors like JPMorgan, Morgan Stanley and UBS, or struck out as independent advisers, taking billions of dollars in assets to their new homes.
And people in the industry are noticing a change in the Merrill culture.
J.D. Power in a 2014 survey ranked Merrill Lynch Wealth Management below the industry average and BofA at the bottom in customer satisfaction.
“I still love Merrill Lynch — and if it was spun out on its own, we would have a buy rating on it. The franchise is still very strong, and it still has best-in-class profit margins,” said banking industry analyst Mike Mayo at brokerage firm CLSA.
For its part, BofA says it’s happy with its man at Merrill and defends its business practices.
“John Thiel is running a great business,” bank spokesman Larry DiRita told The Post.
“Brian Moynihan and the management team see that in the results that are being produced.
“The integration among the various client-facing businesses, including the [financial advisers], gets deeper and deeper every day,” DiRita added.