Merrill Lynch: Wolf in Sheep's Clothing?

I did a double take when I read the news that Merrill Lynch was going to spend $20 million on an ad campaign entitled “The Power of the Right Advisor.”While I wholeheartedly agree that the right advisor is essential, I was shocked to read how Merrill was defining what the “Right Advisor” does for its clients. The definition sounded eerily similar to the independent, fee-based advisor. Has Sallie Krawcheck changed her mind about the threat from the independent wealth manager?

In fact, it doesn’t appear that Ms. Krawcheck has changed her mind about the movement toward independent advisors. She is just making a shrewd decision and following the money. Specifically, brokerage assets and revenues are declining and fee-based revenues and assets are increasing. Clients want advice, not brokerage product sales, and are voting with their assets. A recent study of over 15,000 brokers by PriceMetrix examines this reality in greater detail. The blow-away statistic that caught my attention was that 81% of the new fee-based clients did not have a legacy brokerage account with the firm.

Wake-Up Call

Merrill’s ad campaign should be a wake-up call for independent advisors who have been major beneficiaries over the last few years of the wirehouses’ conflicted business models. Sanctuary’s recent white paper encouraged independent advisors and brokers to take a page from the other professional’s playbook. We didn’t anticipate that Merrill would take our advice so quickly!

Irrespective of whatever garb Merrill and other wirehouses may don, independent advisors need to make business development a core part of the job. Partners at the fastest-growing independent advisory firms devoted more than 40% of their time to new client acquisition, according to Moss Adams.

Strong marketing represents another golden opportunity to grow assets for independents.

Most independents spend their time on wealth management and client service – two critical functions. But marketing is often an afterthought. A PowerPoint, static website or ill-conceived mass mailings are the extent of the marketing for many independents.

Effective marketing starts with better messaging. Many independents need to clearly differentiate their message from other independents. And, they can gain an advantage by drawing the key distinction between their unconflicted approach to wealth management and Wall Street’s conflicted model.

In today’s marketplace, using social networking platforms also sends a strong message all by itself, especially to younger wealth creators. Independents that use Facebook, Twitter or write a blog have the upper hand because wirehouses either block or severely limit social networking over concern about potential compliance issues. This approach also doesn’t cost $20 million.

The bottom line: Tell your story aggressively and warn prospects that “The Power of the Right Advisor” campaign could be a wolf in sheep’s clothing.

Welcome to Independent Insight - The Straight Scoop on Independent Wealth Management

Independent wealth management firms are the fastest growing segment of the financial services industry. Yet, a considerable amount of confusion exists about how successful advisors can leave Wall Street’s conflicted business model for greener pastures and a better night’s sleep.

Independent Insight was created to demystify independent wealth management and explain the benefits of going independent for both brokers and their clients.

Written by veteran wealth management executives, top producing Wall Street brokers and advisors who have broken away, Independent Insight will tell it like it is. We’re going to cut through the clutter and obfuscation to deliver fact based analysis and opinions.

We’re going to tackle the topics everyone in the industry is talking about, even if they are taboo at Wall Street firms or even some established independent firms. And, we’re going to focus on the issues advisors care about most: taking care of clients, growing their book of business, having more control of your time, and securing your financial future.

As with Sanctuary’s BlogOnWealth, which focuses on strategies and insight for investors, we want to know what you think. Please feel free to comment either by name or anonymously. We want a robust dialogue, so we all can benefit from our collective insights.

Growing Assets In Difficult Conditions

In kicking off Independent Insight, we decided to highlight one of the central and timely issues facing both independents and wirehouse brokers: How to grow your business in the post-Madoff, post-financial crisis era.

In our nine-page white paper on the subject, to be released Tuesday, April 12, we detail how independent advisors and wirehouse brokers face three formidable challenges in growing their business:

1. “New normal” market returns of 4% to 6% annually, instead of 8% to 10%

2. A big drop in valuable referrals from CPAs and attorneys

3. Significant difficulties in attracting new wealth creators, GenXers and GenYers, who think most advisors over 40 are out of touch or the firm the advisor works for is untrustworthy.

In offering solutions, the paper takes an unorthodox approach. What Can Independent Advisors And Wirehouse Brokers Learn from One Another? explains how independents and brokers can a take page out of the other’s playbook to succeed. Most of the time, these are warring camps, but in today’s environment, you can’t be blind to what works.

Among other observations, the white paper details what strategies and tactics independents should borrow from wirehouse brokers to improve sales and marketing. It also shows why brokers need to be more like independent advisors if they want to rebuild trust and capture a larger share of a client’s assets.

Welcome to Independent Insight!