![]() ![]() If this process occurs, it allows small accounts to be aggregated into one household. Clients may become “related” through a few keystrokes, and office managers may turn a blind eye when performing due diligence on householding such accounts. In the meantime, Merrill Lynch advisors can do creative things to keep their smaller clients whom they feel are worth keeping, such as breaking householding rules or housing accounts with trainees, or PMDers as they are known internally. For now, my guess is that most Edge clients coming from internal Merrill ranks are what I would call “nightmare clients”-people with $3,000 or less, usually inherited from a wealthy Merrill client who passed away, uneducated, living in a faraway state where the GWIM or PBIG advisor is not licensed, and demanding constant attention. It will be a long process, but the writing is on the wall. I believe their goal is to eliminate as many traditional advisors from their ranks as possible. Merrill Edge is a platform that will probably end up being the core of Merrill Lynch in the future, where there will be a few teams of elite advisors who deal with either high-net-worth clients or complex situations, while the core of Merrill’s financial advisory business will be done in banks, over the phone or on the Internet. The inability of the brokerage format to support the broker’s accountability and responsibility for recommendations for which the broker/dealer is responsible and liable, is still crippling the brokerage industry’s ability to adapt. The counsel in the consumer direct format can easily go far the brokerage format as consumers are dealing with their own money and do not have any fear concerning fiduciary liability that thwarts innovation. The consumer direct space will have more to do with redefining counsel than the intermediary channel as the brokerage industry has to work through how to make brokers accountable and responsible for their recommendations required for professional standing. Of course, if Merrill can not be responsive to professional standing at the point of entry for all investors, RIAs have little to worry about in the under $250,000 market and even the upscale markets beyond. What this means is Merrill and the industry will be making headway in making professional standing in advisory services scalable, not presently a point of focus as Merrill does not acknowledge or support the fiduciary standing of its brokers. ![]() This elevates the depth and breadth of counsel of the entire industry The market segmentation of Merrill’s services is brilliant as long as the minimum threshold of personal advisory service is sufficiently robust to compete with the personal advisory services of advisors active in the under $250,000 market segment.
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