Merrill's Thiel jostles retail brokerage ranks

NEW YORK, March 10 Mon Mar 10, 2014 6:56pm EDT

NEW YORK, March 10 (Reuters) - Merrill Lynch, whose army of stockbrokers has shrunk almost 15 percent since it was bought by Bank of America Corp five years ago, replaced or transferred more than a dozen of its senior sales executives last week as it seeks to increase productivity.

A Merrill spokesman insisted that there is nothing unusual about the management changes that were announced internally by John Thiel, the head of the wealth management and private banking unit.

"This time of year we normally see a combination of natural attrition, retirement and redeployment," he said, noting that Wall Street managers typically leave after collecting bonuses for the previous year.

However, several recruiters and Merrill advisers said the long tenure of most of the executives who were shifted calls attention to the changing nature of branch management jobs and to a significant shift in the culture of the firm since the Bank of America takeover.

Merrill Lynch has dominated U.S. wealth management through much of its 100-year history. Until recently, officials boasted that its executives were the only ones among the big U.S. firms who began as Merrill brokers and understand the rank-and-file. Thiel downplayed that lineage during a January interview with Reuters, saying the executive lineup could change.

Merrill, and competitors such as Wells Fargo Advisors, UBS and Morgan Stanley, in recent years have modified their sales models, encouraging brokers to spend less time picking stocks and bonds for clients and more time guiding them to money managers and to bank colleagues for loans and other products. They also gave incentives to the brokers to work with clients who have at least $250,000.

As a result, branch and regional managers are spending more time negotiating the bank bureaucracy and holding meetings on new strategies than on motivating sales and recruiting which is what drives their pay, said executive recruiters and advisers at the firm who requested anonymity.

The most senior person to leave in the recent shift is Christopher Dupuy, one of 11 national market executives Thiel appointed to report directly to him after taking control of the wealth unit two-and-a-half years ago, according to an internal memo. DuPuy, who was in charge of the northwestern U.S. and was based in San Franciso, left voluntarily, said several well-placed Merrill sources. DuPuy could not be reached for comment.

Thomas Fickinger, who had been in charge of recruiting, has replaced Dupuy and is moving with his family from the East Coast to San Francisco.

As previously reported, Chandler Root, another of the 11 regional executives, was transferred last month from San Francisco to manage some branches in northern New Jersey and New York.

He was replaced as Southwest region executive by Kim Ruth, who has no background in retail brokerage but has sold business and corporate loans and services as Bank of America's state president in Texas for the past 11 years.

In the memo to brokers last week, Thiel lauded Ruth as "an accomplished leader who during her 25-year career in financial services has demonstrated an intense client focus."

Some of the displaced sales executives were shifted to new posts within the company and some were pushed into early retirement, said several brokers and outside recruiters. One joined arch-competitor UBS Wealth Management Americas, a unit of UBS AG that is heavily populated with former Merrill Lynch executives and run by former Merrill wealth boss Robert McCann.

The UBS migrant is William Cholawa, who once ran Merrill's New England region and most recently was a senior strategist in charge of "initiative management." A UBS spokesman said he will begin in May as a director of a branch complex in New England.

Some of the management changes Merrill involve executives who designed the new strategies that the firm is adapting. Riley Etheridge, a top lieutentant to Thiel who oversees product and sales management strategies, is now also running recruiting and talent.

Three of the four people who reported directly to Etheridge, including Cholawa, have changed roles or moved. Ted Durkin, who developed products for affluent clients, is now back managing brokers as head of several branches in Delaware and Pennsylvania.

Dwight Mathis, who oversaw training for new advisers, has been moved to manage Merrill's branch in Pittsburgh and smaller outposts nearby. The firm earlier announced that Racquel Oden replaced him in the training post.

Susan Cruz, who had been in charge of the Pittsburgh branch complex, and Carole Wentz, who oversaw 11 offices in the St. Louis metropolitan region and was once national sales manager, are taking positions that Merrill has not yet announced. Michael Lawrence,a complex director in New Mexico, is taking Wentz's post in St. Louis.

Alane Siem and Mark Sederquist, who were respectively the heads of Merrill's complex of branches in Atlanta and in greater Orange County, California, are moving to Bank of America's Merrill Edge program. It services investors with less than $250,000 through online and phone advice, or through brokers in Bank of America branches.

Several veteran complex directors retired or have left the firm without explanation. They include James Tighe in Minneapolis, William Pike in northern New England, Merril Pyes in Boston, Jesse Iglesias in Stamford, Conn, Jill Packard in New Haven, Conn and Frank Beyer in Delaware, according to the internal memo whose contents were confirmed by the Merrill spokesman.

Some of the changes appear to be aimed at finding new managers who can keep top brokers from leaving. Since Merrill's sale to Bank of America, its broker count has declined by more than 2,000 to under 14,000.

Merrill competitors, aware that retention packages given to top advisers and managers in the wake of the 2009 merger expire next year, are luring some advisers with packages that pay them for the money they leave behind.

Merrill officials say much of the decline comes from low-producing brokers who were asked to leave, and note they have picked up senior advisers from competitors.

They also say that Merrill's record under Bank of America speaks for itself. Though the brokerage force has shrunk, attrition last year among the top 40 percent of advisers was at historic lows and the firm generated record revenue. About 5,150 brokers brought in at least $1 million of fees and commissions compared with 3,450 who reached that level in 2009, the first year Merrill was owned by Bank of America.

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