Deals & People December 8, 2009

BofA Merrill Realigns Retirement Executives

Andy Sieg, head of Retirement & Philanthropic Services (RPS) at Bank of America Merrill Lynch, has made retirement leadership changes, including two promotions and one outside hire.

Reported by

Sieg was named head of RPS when Sallie Krawcheck, president of Bank of America Global Wealth & Investment Management (GWIM), announced her leadership team in September (see “BofA Brings in New Heads for Retirement, Wealth Management”).

The firm said Sieg has “realigned his leadership team to help further focus the business on meeting the needs of its personal and institutional clients, and to support strategic growth areas of the business.”

The company announced the following changes:

  • Kevin Crain, formerly head of plan participant solutions, will now serve as head of Institutional Client Relationships, responsible for institutional retirement business development and client relationship management. Crain is also responsible for oversight of legislative and public policy issues pertaining to retirement.
  • Personal Retirement Solutions business will now expand to include plan participant solutions. The unit will be headed by Aimee DeCamillo, who will continue to serve as head of Personal Retirement, responsible for retirement education and planning, IRA products and rollover process, 401(k) plan participant solutions, 529 plans, health savings accounts, retirement income solutions, and channel management.
  • David Roberts has rejoined Bank of America Merrill Lynch as head of Equity Plan Services, responsible for managing the equity plan platform and the executive advisory services program, as well as the non-qualified deferred compensation platform.

The firm said Roberts will partner closely with DeCamillo and other partners in GWIM to drive wealth management relationships within the equity plan business. The move is an effort to strengthen the business’ equity plan platform and infrastructure.

Additional members of Sieg’s leadership team include: Paul Cummings, head of Institutional Investment & Advisory Services; John Furlong, head of Institutional Benefit Plans; Cary Grace, head of Philanthropic Management; Barry Lindenbaum, head of RPS Operations & Technology; and Kabir Sethi, head of Strategy & Institutional Business Office.

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In Practice December 8, 2009

Online Brokerage Firms: A Menace to Advisers?

Most advisers don’t see independent online brokerages as a threat to their businesses—but a new report suggests they might be.

Reported by

While 69% of financial advisers do not perceive online brokers as a threat to their business, nearly one-fourth of advisers indicated that online brokerage firms capture more of their business than any other competitor, according to a new study by research firm Aite.

The 402 surveyed financial advisers indicated that they lose the most business to the following channels: online brokerage firms (23%), regional broker/dealers (22%); independent registered investment advisory (RIA) firms (17%); traditional banks (13%); and wirehouses (13%).

While regional broker/dealers are a close second to online brokerages when it comes to losing business, they also are the channel where the most advisers said they get the most new business (23%). Contrastingly, online brokerage firms bring in the most new business for 14% of advisers.

The average adviser lost slightly more than 7% of his clients to online investment firms. More than one-third of advisers reported losing no clients to those firms and more than half (57%) reported losing less than a fourth of their clients. A sliver (5%) of advisers, actually lost between one-fourth and half  of their clients to online brokerage firms.

Advisers reported that they still gain more clients than lose clients to online brokerage firms in the last two years. For example, while 37% of advisers reported losing no clients to discount brokerage firms, 21% reported gaining no clients, according to the report.

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However, Aite said that might be a perception. The firm looked at inflows at three leading online brokerage firms over the two-year period, and found that they average a net gain of 25% assets acquired versus assets lost to advisory competitors.

It seems E*Trade’s talking baby commercials have had an effect on Americans, as the firm received the most responses (25%) from advisers for being their biggest online competitor. E*Trade was closely followed by Charles Schwab (23%) and Fidelity (22%).

Aside from clever marketing campaigns, why are Americans interested in the discount brokerage model? Cost. Price far outweighs other attributes as the biggest threat posed by online brokerage firms, according to 69% of financial advisers.

When asked what features of online brokers advisers would like their firm to implement, online trading garnered the most responses (28%), followed by mobile access (22%), customer on-boarding (20%), and online planning tools (20%).

“Despite the barrage of advertising by discount brokers emphasizing a go-it-alone philosophy and attacking financial advisers for high fees and poor performance in the market downturn, advisers have yet to recognize the threat,” said Adam Honoré, research director with Aite Group and author of this report. “Advisers must wake up to reality and combat the messaging coming from the discount brokerage arena. Advisory firms need to offer more competitive online and mobile solutions to foster ‘sticky’ relationships.”
 

More information about the report, “The Direct Business Ambush: Advisors Not Seeing the Threat,” is available at www.aitegroup.com.

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