CheckMate

Another perfect example of what I’ve been saying about the need to be very, very cautious in buying into any of the predictions floating around now…

Ever since the Bank of America acquisition of Merrill Lynch was announced, the press has been full of stories about how all those Merrill financial advisors were going to leave in droves.

First there was all the speculation that no matter what the retention deal was when it was released, it wouldn’t be enough to keep them there.

Then after the retention deal came out a few weeks ago, the hype continued along the lines of how there was going to be a mass exodus of Merrill advisors because of the way the deal was structured, i.e., it rewarded top performers who produce over $1 million annually far more so than those under that number.

Well, guess what - it didn’t happen. Here are the key numbers from “Merrill reps overwhelmingly go for BofA deal” in Monday’s Investment News:

• 94% of financial advisors who were offered a package signed back on.

• About 6200 of the roughly 6600 financial advisors who were offered the deal took it.

• 99% of financial advisors who produce $1.75 million annually or more accepted the offer.

Read those numbers again - I’d say “overwhelming” pretty much covers it.

Some will likely quibble with that definition because, as Merrill Lynch said, “only about half of the firm’s nearly 17,000 advisors were eligible in the first place”, but, as Merrill also said, those eligible were “responsible for about 75 percent of the firm’s production”. (See “Update: 6,200 Merrill FAs Sign BofA Retention At Deadline” at Registered Rep.)

So why did so many stay? I’m no great pundit, but I think it’s a sign of the times and really pretty simple. With things being so turbulent right now, most of the Merrill advisors saw no great advantage in leaving and thought it was a smarter move to stay put.

Now that’s not to say that I don’t think it’s a smart move for some advisors, especially top producers, to make a move if the timing and situation are right - far from it. Nor do I think that this is a big sign that this is the end of top financial advisors leaving their current firms - that’s always going to go on.

No, my point is just what I said at the beginning and have been saying for some time now. Be very skeptical about any predictions you read, especially right now, and examine them closely, particularly the source of the prediction.

And if you’re someone who’s intent on becoming a financial advisor, I’d also say there are some very good lessons here, not only about the nature of predictions, but, more importantly, about what actually happened at Merrill Lynch.

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