Barry Ritholtz highlights a disturbing trend amongst the large wirehouse firms today on his blog:
“Bank of America’s Merrill Lynch division will no longer pay its advisers on business done in new relationships they establish that are under $250k. Previously, the cut off was $100,000 dollars. What this means, quite simply, is that no Merrill adviser is going to pursue such business.”
“I expect two current trends to continue:
1) The exodus of advisors from the big bulge bracket wirehouses towards smaller independent firms
2) Clients and their assets (regardless of size) will continue to gravitate away from big firms and towards do it yourself discount brokers and independent advisors.”
If $250,000 is no longer an acceptable relationship for an Advisor to pursue, then where is the industry headed? Will that number be $1,000,000 three years from now? It’s unfortunate that these firms are using such arbitrary figures to classify the value of a potential client. Is this how the large banking institutions are trying to repair their image with Main St.?
Merrill’s 2012 Pay To Drive Advisers To Richer Clients
WSJ, December 23, 2011 http://blogs.wsj.com/financial-adviser/2011/12/23/merrills-2012-pay-to-drive-advisers-to-richer-clients/