LEAKED MEMO: Merrill Lynch hit pause on financial adviser trainees contacting potential clients after ‘many’ outreach-related violations (BAC)


  • Merrill Lynch Wealth Management recently temporarily paused its financial adviser trainees’ abilities to contact potential new clients after there were outreach-related violations. 
  • An internal memo showed the business told adviser trainees in late July it was pausing that outreach and instating mandatory training around best practices for soliciting new business.
  • A separate memo sent to some Merrill employees on Monday said the temporary policy came as a result of “many violations across the organization.”
  • The new guidance comes as financial advisers-in-training are stuck at home without traditional ways of meeting clients, and sprawling firms like Merrill have scrambled to adjust to the unprecedented complications of mass remote work.
  • Visit Business Insider’s homepage for more stories.

Bank of America’s wealth manager recently prohibited its financial advisers-in-training from reaching out to prospective new clients, cutting off a crucial way of bringing in new business for adviser candidates as in-person events and meetings were eliminated during the pandemic.

The reason for Merrill Lynch Wealth Management’s temporary pause was “many” outreach-related violations across the organization, according to an internal memo seen by Business Insider that was sent from a market executive to a group of Merrill employees on Monday. 

The manager’s memo also encouraged some full-fledged financial advisers to participate in re-training sessions the business is holding around procedures related to call lists and other outreach protocols. The memo did not outline what violations occurred or how many were recorded. 

“We consistently review our policies, procedures and controls for potential enhancements, including with respect to call screening, in order to comply with regulatory requirements,” a Merrill Lynch spokesperson told Business Insider. 

“We’re continually monitoring activity for compliance with outbound communication policies and procedures and, as with all policies, we take appropriate action for non-compliance,” the spokesperson added, and declined to comment on specific employees’ situations.

The pause in outreach to potential new clients came as the firm’s some 3,000 financial advisers-in-training are stuck at home without traditional ways of meeting new clients, like networking events, and sprawling businesses like Merrill Lynch have scrambled to adjust to the unprecedented complications of mass remote work.

National Financial Advisor Development Program (FADP) Performance Executive Jennifer MacPhee said in a July 31 email that for several weeks, trainees are not allowed to make outbound calls or reach out to prospective new clients in other ways, like over LinkedIn.

They are expected to focus instead on new mandatory training sessions around best practices and technology used when reaching out to potential new clients, as well as servicing existing clients, MacPhee wrote, according to a memo Business Insider reviewed. 

Read more:A financial-adviser retirement wave that could put trillions of assets in play is kicking into high gear thanks to the pandemic. Here’s how firms are tackling the handover crisis.

The industry publication OnWallStreet first reported the pause in trainees’ outbound interactions. 

“Shortly after the reeducation sessions, we will reach out to inform you when outbound prospecting activities are reinstituted,” MacPhee wrote. 

MacPhee also included in her initial guidance that Merrill would ease or freeze trainees’ various goals in accordance with the outbound contact pausing so that their performance hurdles would not be negatively impacted.

The trouble with cold reach-outs

Across the wealth management industry, cold-calling and outreach to strangers has long been a way to acquire new clients who need help with their finances.

Reaching out to prospective clients must be compliant, though, and sometimes reaching out to someone who may be on a “do not call” list, for instance, could land an adviser in trouble. The Federal Trade Commission administers such a list. 

Three advisers left Merrill last fall after allegations that they improperly solicited prospective clients in violation of the firm’s policy, according to an AdvisorHub report that cited BrokerCheck records.

In 2015, the firm paid $400,000 as part of a settlement with the New Hampshire Bureau of Securities Regulation over allegations it improperly tried to solicited people by contacting people on do-not-call lists. At the time, a Merrill spokesperson told InvestmentNews the business strengthened its relevant internal controls. 

Read more:LEAKED MEMO: Bank of America sent 3.2 million mistaken emails about fraud claims to customers including Merrill Lynch and private bank clients, sparking a surge in calls from worried customers

Changes to the training program throughout the pandemic

The FADP is a rigorous, ultra-competitive 3-1/2-year-long program that brings in novices and trains them up to be full-service advisers. It’s also the wealth manager’s primary pool of adviser talent and a major engine of growth as it’s largely stopped hiring experienced financial advisers from competitors.

As the wider wealth management industry grapples with a retirement crisis that has far fewer younger people entering the business than exiting or retiring, Merrill Lynch and its wirehouse competitors have focused on robust training programs to source new talent. 

The program has gone through several shifts throughout the COVID-19 pandemic this year.

Read more:Bank of America has made at least 45 hires this year for an aggressive push into the red hot — and super competitive — business of courting corporate HR execs. Here’s why it’s betting on the space.

In early April, as the US federal government’s Paycheck Protection Program was in full swing, the business shifted some 650 advisers-in-training over from their typical duties to assist with consumer and small business customers in other areas of the bank.

Later in April, the FADP paused interviews for trainees applying to enter the program as it adjusted to remote work, and the company said in July it resumed interviews.

Merrill Lynch reported $2.4 trillion in client assets under management as of June 30. 

Got a tip? Contact this reporter on the encrypted app Signal at (631) 901-5340, or via email at rungarino@businessinsider.com or rungarino@protonmail.com. 

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