Merrill Lynch strategy - Brokers told to get rid of least affluent clients
Derek DeCloet
National Post
Merrill Lynch Canada Inc. is telling its financial advisors to stop giving personal service to their least affluent clients.
An internal company document obtained by the National Post says the firm will no longer pay brokers to deal with households with less than $50,000 in financial assets.
About 65% of Canadian households fall into that category, according to one recent survey of investors.
"Our old vision of bringing Wall Street to Main Street was a bold and correct strategy for the 1940s and for several decades following," Win Smith, chairman of Merrill Lynch International, says in a letter to employees across the country.
"Conditions today, however, call for a much more refined approach."
The memo continues, "In Canada and other regions, we have determined that our greatest opportunity rests with high net worth and ultra-high net-worth clients."
The document suggests advisors refer small investors to a new division that will handle their requests from call centres. Doing so will allow brokers more time "to provide premium service to your clients with larger asset bases," it says.
Last year, Merrill Lynch was embarrassed when one of its managers in New York wrote a similar memo that used even more blunt language. It said: "If we are going to be financial consultants to the wealthy and successful individuals and businesses, then we don't have time to provide financial services to the poor."
Peter Kahnert, a Merrill spokesman, said the firm is opening call centres in Montreal, Toronto and Vancouver, and will eventually have at least one in every province. "It's a decision that makes good business sense," said Mr. Kahnert. "In many ways, it will enable us to provide a higher level of service" to clients with less money to invest.
The call centres will provide the same functions a broker does, including stock trades, advice and financial planning, he said.
The new policy takes effect for existing Merrill accounts on July 1. Merrill has approximately 1,200 brokers in Canada -- the firm calls them "financial consultants" -- and about 600,000 accounts. It manages $55-billion in assets.
Mr. Kahnert could not say how many clients would be affected by the change.
While small investors will have to dial a toll-free number for financial advice, Merrill is encouraging its brokers to roll out the red carpet for wealthier customers.
The document says Merrill's financial advisors are eligible for special funding -- up to $25,000 for top-producing brokers -- to be spent on travel, meals and entertainment, "to support their transition to the high net worth strategies."
Mr. Smith says in the document there are 4,800 "ultra high net worth" households in Canada --defined as those with more than $10-million in investable assets.
Merrill has 1.5% of that market, he added, but intends to increase its share to 8% within five years. |
