When Bank of America Corp. acquired Merrill Lynch & Co. Inc., it gained a stronger unified managed account platform than its own and a team of executives well versed in UMAs. Now the Merrill contingent is leading the development of the platform.
Jon Goldstein, a spokesman for B of A, said Mitch Cox, who headed global investment solutions at Merrill, will manage the Charlotte company's global wealth and investment management's complete investment product suite, including unified managed accounts. Mike Perry, who also worked at Merrill, will report to Mr. Cox and run managed accounts and managed account platforms, Mr. Goldstein said in an interview last week.
Analysts said it makes sense for Merrill to take the lead.
Christopher Davis, the president of the Money Management Institute, said Merrill has been offering UMAs for years, but B of A, which had $35 billion in fee-based assets under management before buying Merrill, started its UMA program two years ago.
"Bank of America is a leading bank and a huge presence in the industry," Mr. Davis said. "And this merger with Merrill, which has an established UMA program and a huge group of financial advisers, will benefit their UMA business tremendously."
He said B of A is "well positioned to take advantage of growth in the UMA business because of their brand and their resources."
Dan McNamara helped build Bank of America's UMA platform, but he will not be part of the next phase. He was among a group of wealth executives B of A fired this month. Mr. Goldstein said "these decisions are part of an ongoing series of leadership announcements made as Bank of America goes through the process of integrating with Merrill Lynch."
Mr. McNamara said B of A is serious about unified managed accounts. "A lot of people see UMAs as a product, but it is a platform that gives folks the opportunity to break down product walls and provide clients an efficient way to diversify their portfolio," he said in an interview last week. "Both Merrill and Bank of America realize this. The UMA is still in its early stages, but both organizations are committed to it."
As one of the executives selected to lead the transition of investment products, he was paired with an executive from Merrill. "We spent days working together and finding ways to bring these UMA platforms together," he said. "They had also been looking to use the UMA platform as the primary way to deliver investment solutions to customers. So, philosophically we were very much aligned."
Because the two companies agreed on so much about the UMA platforms, he said, by mid-November "we hit a point where we couldn't execute further until we had leadership named."
Mr. McNamara, who ran Wachovia Securities' managed account unit before joining B of A in 2001, said he "expected to stay with" the bank. "Usually when you are put on a transition team it is a good sign. I had very, very positive conservations with senior-level people and was hopeful about my future with the company."
Mr. McNamara said he had been through 10 acquisitions during his career and "thought everything was going to be OK," because this one "was the easiest merger that I have ever been a part of," he said in an interview last week.
Then he got a call from Keith Banks, the president of the bank's global private client services group, telling him he was out of a job. Mr. McNamara said it was ultimately a "lack of sponsorship" that cost him his job. "I was challenged at the bank, because in my seven years here I reported to seven different people," he said. "Continuity of leadership is important."
Mr. McNamara said B of A was developing a program with its private banking arm, U.S. Trust, to deliver all of its investment products to high-net-worth clients through its UMA platform. He said he expected the program eventually would be used for all of B of A's investment customers.
"Over time, they will get there," he said. "The next step is to provide a holistic view to local portfolio managers and to add alternative asset management capabilities to the portfolio."
Mr. McNamara estimated the integration of the B of A and Merrill UMA platforms will take 18 to 24 months. "Down the road, the organization will be in phenomenal shape, and UMAs are part of the strategy," he said. "It will be a tough road to get there, but they are well positioned to be a leader."
Mr. Goldstein said it is too early to determine what the company's strategy will be in any of its investment product lines.
Mr. Davis said with $8 trillion to $12 trillion in cash on the sidelines and investors demanding well-diversified investment products and services, unified managed accounts will be essential for any bank that wants to develop its assets under management.
Mr. McNamara said he will take his time before committing to his next job.
He said he expects opportunities at small and midsize banks. "I definitely want to stay on the traditional investment side," he said. "I know that this is not the ideal environment to be hunting for a job, but there will be catalysts that provide opportunities."
Unified managed accounts "are still the fastest-growing products from a percentage basis in this industry," he said. "We were starting to see a lot of success at B of A, and this product is not going to stop just because my time there has ended."
