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Trust, but verify.....looking into one firm's client retention claim

MiscellaneousSean Kernan3 Comments

Here's a recent article in Investment News I found interesting (you might have to register to read the entire article, but it's free). It's a response to another article that I found even-more interesting, claiming that Merrill Lynch retains 40%-50% of client assets when an advisor leaves the firm. 

I wanted to share my thoughts on the very popular article as I think it applies to many advisors thinking about leaving a wirehouse for independence. 

First of all, trust, but verify....That phrase, popularized by President Ronald Reagan, is very applicable when determining what's true about setting up your own practice. The headline of the article summarizes it very nicely:  Recruiter questions Merrill's client retention numbers. Numbers are a funny thing---they can be twisted to suit one's purposes in any number of ways.  

ML says they have retained 40 to 50% of client assets in the year after advisors depart the firm. Danny Sarch (the author) asks several great questions so I won't repeat them here (read the article--it's great!)--but I will repeat the lesson I got (or had reinforced) for this: TRUST, BUT VERIFY.

What is Merrill Lynch's reasons for publishing these "facts"? The only benefit to them is to try and plant seeds of doubt in the minds of advisors who are at ML.  If we want to VERIFY what advisors actually experience, how can we do that?  

I recommend reading through some basic industry resources (like this:, finding people that have LEFT MERRILL LYNCH, and reach out to them. I find that most are willing to share their experience, especially once they are beyond that initial burst of activity during the transition.  

Heck, if you want more ideas of how to do that, shoot me a note and I'll give you my four cents on what I would do to find those people---and have done! 

In summary, I know it is hard to believe, but Merrill Lynch's motives may not always be perfectly aligned with an advisor who wants to leave Merrill Lynch. Trust, but definitely verify.