Bank of America Corp. is finding Merrill Lynch is better off left alone.
Taking more of a hands-off approach with its Merrill Lynch financial advisers, the Charlotte company had "historically" low broker attrition in the fourth quarter and even plans to add advisers this year, Sallie Krawcheck, the president of Bank of America Global Wealth, said during a conference call Thursday.
"Going into the downturn, I'd have expected advisers would've left the business altogether or gone to independent firms, and we've seen some of that, but not as much as expected," she said.
Krawcheck said attrition rates nationally and at the Bank of America Merrill Lynch wealth management operation "ranged higher" at the beginning of last year, but for B of A, attrition rates were at "all-time" lows in the fourth quarter.
Attrition of top producers was "half of the previous best year we ever had," she said.
Krawcheck acknowledged on the call that B of A had to overcome a variety of issues to win the trust of Merrill Lynch's advisers.
"I think that all the fears that [Merrill Lynch] advisers had, and all the things that were whispered about," were not true, Krawcheck said. "There are no quotas here and no plans that require advisers to sell x, y or z product. … These advisers remain in the same offices with the same managers. … They are now just working with an organization that continued to invest in this business during the downturn."
Barbara Herman, an executive recruiter at Diamond Consultants in Chester, N.J., noted there was "record" attrition in the first three quarters of the year, and said the late-year slowdown in departures at B of A might be part of an industrywide trend.
"A lot of advisers approached the end of last year and chose stability for their clients and figured they would reconsider moving" this year, she said. "Merrill Lynch was effective in retaining a significant number of advisers through its retention package, particularly when it came to their largest producers."
Other recruiters said retention rates are stabilizing at Bank of America Merrill Lynch compared with a year ago, even while other wire houses, like UBS AG, are scrambling to retain advisers.
"I am sure attrition has dropped dramatically from when Wall Street was on fire," said Bill Willis, a recruiter in California. "The fourth quarter of 2008 was pretty chaotic. Advisers are still moving to independent firms," he said, but "there isn't a mass exodus going on here."
Bank of America Merrill Lynch plans to add to its adviser head count this year, Krawcheck said, but she said she does not expect to add at a "high rate." She said the company is interested in adding advisers that are new to the wealth management business.
Willis said, however, that Bank of America Merrill Lynch is still going after the "big people on Wall Street."
"Unless they have changed their stance in the past two days, they are aggressively pursuing top producers," he said. "They want the best and the brightest, not the mediocre. You have to spend money to attract those folks, but then again, it is politically incorrect right now to talk about spending on Wall Street."
Willis said large companies are feeling a "general population shift" as some of their advisers move to independent channels. Other large wealth management companies, including Morgan Stanley Smith Barney and UBS, have been forced to alter their retention packages to retain top talent.
Krawcheck said the reality at Bank of America Merrill Lynch is a lot different than the "buzz and the industry chit-chat. This transaction was good for our advisers."
"Clients are saying to their advisers that they want to be someplace that is financially strong and gives [the adviser] the capabilities to solve problems during the difficult years ahead," she said. "I'm not Pollyanna. I worry about everything. But right now the business feels better than the common wisdom that is out there."
Herman said Bank of America Merrill Lynch could see more attrition this year. B of A "was relatively slow to begin exerting its own culture and its own influence, but advisers tell us that they are starting to feel the influence of Bank of America," she said. "Every adviser I talk to at Merrill Lynch is telling us that they are not working for the same firm that they worked for a year ago."
