Merrill Lynch executives said three quarters of its 2,400 trainees are on track to graduate from the program.
That success rate is more than double the historical industry-wide average of advisor training programs, which typically advance around 30% of candidates, Merrill executives said. While the firm has been known for its training program, the improving success rates reflect a revamp in recent years, according to John Towey, Merrill’s head of client services and advisor training.
“Today our program remains the industry’s most comprehensive, full-scale advisor training program,” Towey said on a call with reporters. Novices graduate from the program with average assets under management of around $64 million, he added.
Consultants have said that rookies need at least $13 million in assets and close to $300,000 in revenue to be self-sufficient. Across the industry, around 72% of trainees drop out before becoming financial advisors, according to Boston-based Cerulli Associates, which attributed the difficulty to the fact that most trainees start with no experience in financial services.
In the past five years, Merrill, which previously said that graduation rates could reach 80%, has hit the reset button on its advisor training programs. It has drawn more heavily from bank employees, sought to shed a “sink or swim” approach and frequently introduced additional tweaks.
Towey said the “foundation” of the training program is “unchanged” but that Merrill “introduced enhancements to the advisor development program…based on feedback from trainees, our advisors and market leadership.”
Most recently, it reported in a brochure filed with regulators earlier last month that it had reclassified a group of novice advisors to resemble their more veteran counterparts by permitting them to charge up to its maximum advisory fee and offer similar investment products and services to clients.
Merrill is “aligning” trainees’ experience with the advisor role “by providing earlier access to Merrill’s full suite of products” so they “develop a broader understanding of how we serve clients across investing, banking, lending, and planning,” Towey said.
The trainees will also have “the ability to join advisor teams sooner,” which makes sense given the need for succession pipelines for those teams, he said.
Merrill has also piloted a program for trainees to start as Merrill client associates, rather than at the parent bank, and feed directly into the Merrill advisor training, Towey said. The wirehouse started the program with 25 participants and plans to roll it out more broadly although it has set no target numbers, Towey said.
“This role creates an additional entry point into the profession and allows trainees to begin their careers working in a Merrill office alongside advisors,” he said.
The focus on training comes as executives at Bank of America continued to stress that headcount growth would be key to serving an increasing pool of wealthy customers and adding assets under management. Merrill executives remained focused on a plan to “just keep growing the sales force,” Bank of America Chief Executive Brian Moynihan said on the company’s earnings call.
In the second quarter, Merrill’s client balances grew 12% year-over-year to $4.1 trillion, including investments, deposits and loans. Its net new client asset flows dropped 4% year-over-year from $14.3 billion to $13.7 billion.
“We’ve got more to do…over the next three to five years,” Moynihan said in response to an analyst question about its asset flows.
The Global Wealth division is “off to a good start” with advisor attrition “near historic lows,” he said.
Bank of America’s roster of clients with more than $500,000 invested grew in the quarter by about 6,000, the company said. Merrill’s revenues increased year-over-year by 16.3% to $5.7 billion.
Income for the bank’s Global Wealth & Investment Management, which includes Merrill and the Private Bank, rose year-over-year by 41% to $1.4 billion on total revenues of $6.9 billion, which increased 16% year-over-year.
Merrill is reacting to the realization that financial advisor attrition is exceeding recruiting and training numbers. It is the only major firm, outside of Edward Jones, that has any meaningful advisor trainee program. Nonetheless, unless they start administering IQ tests prior to admitting some of the imbeciles that they’ve been trying to pull from our urban jungles, the programs will be worthless.
You’re a POS and you’re wrong.
Unfortunately having spent nearly 15 years at a very successful office with ML seeing over 150 trainees come and only 2 stick, hearing the same success stories previously that were bogus, I question their accuracy.
But Intruely hope they can succeed as the industry is far behind it’s attrition needs for replacement.
I bet you wonder why you never see your grand kids.
I’m super curious what the 25% did not to graduate. Likely couldn’t pass the 7.
Missed goals/never wanted the job in first place but since we’re told hire a dozen a year or it’s our bonus; a few that won’t ever make it and it’s understood, get through. Think kids of FAs who’s wives are on them for jobs, they get them in program. Kid gets some coin and benefits and we get mom off the FAs back. Had at least 5 of those. Bigger issue I have is broadcasting the BA number. 75% doing some heavy lifting for us. Truth is we moved the goal post. The 75% is accurate in the same way the number of kids who went from 7th to 8th grade is accurate. If pushed for a real success after 3-5 year number, my sample size says it’s about 10.65%…give or a take a person here or there. Trust me though, 12 is plenty. Any more and you get into cute female who wrecks big team territory or you go 0-16 or so in hires and that’s no good. I interviewed guy last week for the role and when I asked why he wanted to be an FA, he told me he had a neighbor growing up and his dad used to say he never saw someone work less and make more, and it stuck with him. True story you can’t make up. So cheers to our 75% grad rate! By our math we should be flooding the street with newly minted FAs any day now so hold on to your books….
Let me recap the past week: 75% trainee graduation rate; the trainees can charge 1.75% AND Merrill managed to recruit someone?!
The Bull must be getting tired of ALL. THIS. WINNING.
The success is amazing. Brian and his crack staff of leaders might just get the stock to stay above the 2006 level.
At any point in the history of the legendary Merrill training program, MLPFS could have let 75% of trainees graduate. But now trainees graduate from their MFSA program to what we did as PMDs. Wild times.