Merrill to lay off 400 trainees
Merrill Lynch & Co. Inc. is laying off close to 400 brokers in its training program, the firm announced this week amid criticism that its new owner, Bank of America Corp., is overlooking up-and-coming brokers.
Merrill Lynch & Co. Inc. is laying off close to 400 brokers in its training program, the firm announced this week amid criticism that its new owner, Bank of America Corp., is overlooking up-and-coming brokers.
Bank of America shot itself in the foot by passing over up-and-coming brokers when it announced its retention deal in late October for about half the 17,000 brokers with Merrill Lynch, according to some Merrill brokers and industry observers. (InvestmentNews, Dec. 15).
Merrill brokers who produce less than $500,000 annually will receive bonus incentives that range from nothing for the lowest producers to a deferred cash bonus of no more than 20% over three years.
But young, fast-rising brokers, who receive a relatively small retention bonus, are worth much more on the open market, and are poised to jump to another firm, sources said.
Earlier this year, before New York-based Merrill was acquired, the firm introduced a new training program for brokers, called Paths of Achievement.
It is unclear how many trainees were taken on at that time.
Amid this year’s economic whirlwind, other wirehouses have cut back or eliminated their training programs, while Merrill Lynch has kept training reps, even though it is an expensive and risky proposition — only about one in 10 brokers in training develop into successful reps, according to experts.
“This is a luxury Merrill and Bank of America are not going to pay for,” said Danny Sarch, a recruiter in White Plains, N.Y.
“Training has fallen out of favor. It’s harder than ever for these [reps] to be successful right out of the box.”
Charlotte, N.C.-based Bank of America will close on its acquisition of Merrill Lynch at the end of the month.
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