State of the Merrill/BofA Union

According to Merrill wealth management executives the merger with Bank of America is exceeding expectations.

As of August Bank of America's purchase of Merrill Lynch appeared to be going well (apart from the brouhaha over the bonuses paid to Merrill executives without BofA shareholders' knowledge and the fact that former Merrill brokerage chief Robert McCann sued BofA to release him from exit terms that kept him from taking another job).

Since the deal was announced, Merrill says, it has retained 95 percent of its top-performing advisers and 50 percent of client assets for advisers who have departed. Merrill also reports that it has added $14 billion in new money from FDIC-insured deposits that the firm couldn't have obtained pre-merger.

More than 25,000 customer referrals have been made from the consumer bank to the brokerage and several thousand referrals have been made from the brokerage to the commercial bank, the firm adds, noting that Bank of America advisers now have access to structured products and investments they did not have access to before. In August the newly merged organization also launched a referral process between the call centers at the consumer bank and Merrill's financial advisory call center for clients with lower asset levels.

The integration process, however, has been more challenging. Pre-merger, Merrill Lynch had one broker-dealer for retail and institutional clients. Bank of America had two third-party broker-dealers -- consumer broker-dealer BAI and institutional broker-dealer BAS -- as well as U.S. Trust, which is and will continue to be part of the bank and will not be merged with the Merrill Lynch legal entity. BAI, BAS and most of their platforms will be merged into Merrill Lynch Pierce Fenner and Smith. In a first phase, at the end of October the BAI legal entity will be merged with Merrill Lynch Pierce Fenner and Smith; from that point forward one broker-dealer will service the firm's wealth management business in the U.S., according to Merrill wealth management executives.

Merrill Lynch desktops and infrastructure will be rolled out to all of the BAI financial advisers in October, although their existing clients will not be migrated onto the new platform until the third quarter of 2010, relates Mark Alexander, managing director, head of technology, operations and Broadcort clearing for global wealth and investment management. The BofA advisers will be able to open new client relationships on the new platform starting in October. "We can't get it to them quickly enough," says Alexander. "When they see the capabilities, they salivate. The same is true for U.S. Trust, which will have access to the platform in the second half of 2010."