The
But those hopes are likely to be short-lived, as the less-experienced leaders replacing Sieg face an uphill battle to improve morale at a firm that's
"There's going to be a wait-and-see that's going to last 60, 90 days," Phil Waxelbaum, an industry recruiter who is the founder and principal at Masada Consulting, said in an interview, referring to Merrill advisors under the new leaders.
"If these advisors start to sniff that it's business as usual and new people wearing $3,000 suits and freshly whitened smiles — they'll run."
On March 30, Sieg announced his departure from Merrill, where he had started his career as a financial advisor in
Lindsay Hans and Eric Schimpf, who had been regional division executives for six years each,
"You have to let this stuff play out," Jason Diamond, an industry recruiter at Diamond Consultants, said in an interview about what Merrill could look like under Hans and Schimpf. "Are they going to have the autonomy to implement their own decisions? Or are they really just going to be carrying out the orders from Brian Moynihan and the bank?"
Not 'your MacArthur or your Patton'
One thing seems evident, though: the moves were hastily made. On the day Hans and Schimpf were promoted, there was no announced replacement for the roles they were leaving. The next day, without even deploying the news in a press release, the firm announced internally that longtime private wealth head
Plaus, who worked over 32 years in many executive roles at Merrill, had announced in February that he would retire after March 31.
"It shows that the Sieg departure caught the firm a bit off guard, and they're scrambling to fill critical positions," Diamond said of Plaus's move.
For Waxelbaum, elevating a well-liked, highly experienced veteran like Plaus to be the interim head of Merrill would have made more sense on the bank's part. Although "they may rise to the occasion," he said of Hans and Schimpf, there will be a steep learning curve.
Waxelbaum noted that while Plaus had extensive experience with many sides of the banking business, neither Hans nor Schimpf had experience with crucial leadership areas like compliance and regulation.
"Neither one of them have any trading or investment banking experience," he added.
"If you have a circumstance where your armies are failing and there's a high rate of casualties, you don't take your least-experienced leader and send them there to fix it. You find your MacArthur or your Patton and you send them there."
On the other hand, Plaus may be able to act as a bit of power behind the throne — not as a regent to the new co-heads at Merrill, but possibly a much-needed guide to getting things done.
"Maybe there is some genius in this but we're just missing this," Waxelbaum said.
While Waxelbaum was also skeptical that Hans and Schimpf would be able to implement changes advisors have long wanted — like getting rid of unpopular compensation grid policies that were announced under Sieg's leadership — he acknowledged that they have an opening to do so.
"The first instinct of advisors is, when any head leaves, the king is dead — long live the king. There's going to be pollyannaish expectation," he said of advisors, who would be eager to support Hans and Schimpf in those actions.
But most likely, Waxelbaum said, the new leaders will have a tough time putting through big changes to advisor compensation that avoid ruffling feathers with Bank of America analysts in the process, who would then adjust earnings projections. That means Merrill could see even more attrition later this year than it's had up to now.
"I think you'll have the highest rate of departure from Merrill Lynch this year, in the fourth quarter," he said of advisors.
It's hard to outrun history, too, the firm's leaders may discover. When Bank of America
Gardner, who is the founder and chief education officer of financial literacy group FinLit Tech, has worked at several wealth management firms. He was a vice president providing wealth management to high net worth clients at Bank of America in 2007, before it acquired Merrill Lynch.
"Prior to that, the Merrill Lynch advisor, when they were just Merrill Lynch, ran the relationship," Gardner said.
"The private banker typically is the quarterback" at the firm now, pulling in many resources from the rest of the bank to serve a high-end client, Gardner said. But the Merrill Lynch advisor used to be that quarterback.
With Sieg's departure, Merrill's problems appealing to advisors on the job market will just be exacerbated, Waxelbaum said. "From a recruiting standpoint, they don't have anything to sell right now," he said of the firm.
Starting over and building 'from scratch' for Sieg and Citi
Meanwhile, with his new gig as the incoming head of Citi Global Wealth, Sieg will be watched for how he fares with an opportunity to build up a much smaller wealth management business — which could bring out a different side of him as a leader than the industry has seen so far.
"It's impossible to determine if the direction at Merrill was at Andy's discretion," Waxelbaum said, noting that "a lot of things done with compensation just have more of a character that's more of Brian [Moynihan] than of Andy."
Hiring Sieg is also Fraser's signal to the wealth world to sit up and take notice that Citi's ready to put itself back on the map by bulking up on its U.S. wealth management business — which Fraser hinted at in an internal memo last week announcing Sieg's hire.
"We aim to grow significantly" in the U.S. wealth market, Fraser said.
A Citi spokesperson confirmed in an email that the firm currently has around 3,000 financial advisors, including "private bank[er]s, financial advisors, investment counselors and relationship managers." Citywire
"If you ask most industry insiders, they'll tell you that as it stands now, Citi is not an A-list player in the U.S. wealth management landscape," Diamond said. "That can be very exciting. He gets to build this unit basically from scratch and create it. He can make it basically whatever he wants."
Andy Tasnady, industry compensation consultant and the owner of Tasnady & Associates, agreed that while Sieg was moving to a smaller brand in the industry, it could be more liberating.
"One of the positives for Andy would be that probably he'll have a little more freedom," Tasnady said in an interview.
Tasnady predicted that Sieg could face "less levels of approvals and coordination needed if he wants to drive the business in certain directions."
