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How Merrill Lynch Clear looks so impressively RIA-like and what shows how deceptive looks can be

The big iPad-laced and rhetoric-laced wirehouse initiative toward goals-based investing may have selling insurance as its primary goal

Author Brooke Southall June 18, 2014 at 5:54 PM
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John Thiel: People are looking for advisors who understand that the retirement conversation isn’t about a math equation.

Brian Hamburger


Joe Duran


Sophie Schmitt


Michael Kitces


John Thiel


Robert J. Martorana

Stephen Winks

Stephen Winks

June 18, 2014 — 8:18 PM

It will be very difficult for Merrill or any advice product company to manage the institutionalized inefficiencies in advisory services which are counter to the best interest of the investing public and the professional standing of the broker.
The streamlining of cost and the management of a high level of portfolio detail in real time required by statute, requires a more modern approach to portfolio construction which is prevented by expensive product packaging.

As long as advice is thought of as a product that is sold rather than expert prudent process that is managed—the absence of accountability and ongoing responsibility for broker recommendations to which firms are held liable, will continue to be the Achilles heel of every broker. Are brokers really reliable? Are brokers acting in the best interest of the investing public? Does the trust and confidence of the investing public need to be restored? Why then isn’t Merrill actually supporting advice and professional standing of their brokers rather than selling investment products with no ongoing accountability requiring the fiduciary standing of the broker?


Kate McBride

Kate McBride

June 18, 2014 — 10:16 PM

An ipad app does not a fiduciary make. Merrill may fool some investors, but it’d be a shock is this isn’t just window dressing. When they actually have an RIA with bona fide registered investment advisers, who actually operate under the bona fide, authentic fiduciary standard and actually put investors’ interests before the advisers’ or firms’ interests, let’s talk. Otherwise, it’s just bringing back the bull …. .

Wall St’s current system of buyer beware — the system of, 'let’s see how much of this investor’s money we can carve out for ourselves,’ of putting the firm and rep before the investor, of investors serving the firm or rep, rather than the adviser and firm serving the investor, is dying. The aging “bull” is dying.

That’s why Wall Street had to hire former Congressional Reps to fight off actually putting clients first as fiduciaries. That’s why they have no truth to tell when it comes to keeping the status quo of the sales-suitability standard. That’s why they need to obscure their reps’ sales functions with titles that convey trust, orudence and knowledge: advisor, counselor, consultant, wealth manager, — all of these imply that an investor is putting their money into prudent, loyal, careful hands. And that’s why investors are leaving brokers, banks insurance reps that refuse to serve investors as fiduciaries.

Merrill, the firm that’s paying $100 million in fines and repayments for overcharging charities and retirement accounts — CHARITIES and RETIREMENT ACCOUNTS — thinks it can make it up with an iPad?

Investors may not know exactly why they are uneasy, but they know something is wrong and they are searching for a better way. And as they understand that they are being bled — to the tune of missing $100k or more in excess fees/commissions deducted from their retirement accounts, they will demand a better way. And they will find it. —Kate McBride

Teresa Vollenweider

Teresa Vollenweider

June 18, 2014 — 10:48 PM

Plain and simple—Merrill Lynch (that’s BOA) is a wirehouse, and Arthur Levitt, a former SEC chairman, in his book Take On The Street asked—How big are the conflicts between brokers (that’s pseudo financial advisors/ers) and investors? A top official at a wirehouse replied that the conflicts were so big that he wouldn’t send his mother to a wirehouse (that’s a full service brokerage house).

Why is Thiel not wearing his authentic-looking sheepskin in your picture? Let’s see now the Wall Street Journal reported that Merrill Lynch was raising fees on their investment clients and that financial advisors/ers (that’s pseudo financial advisors/ers, aka brokers) need to inform clients by 2015 of the increase in fees. Of course that information will be buried in some plain vanilla letter (probably one of the wirehouse’s “happy” letters).

Let’s see now, then it was reported that—Merrill Lynch is dangling a new incentive in front of its brokers by creating a “recognition club” for those who bring in $8 million or more a year from clients, more than doubling the top goals set by its securities industry rivals.—Now that will push that thundering herd of brokers (that’s pseudo financial advisors/ers) to kick in those fee increases sooner rather than later. Sneaky but good move, Thiel. They won’t wait until 2015 to kick in those fees. That carrot is just too tempting. It’s downright irresistible. Think siren’s song.

Then Mr. Thiel made the rounds to ask the pseudo financial advisors/ers (that’s brokers) to ask themselves “What’s your noble purpose?” How sweet.

Would someone please remind Mr. Thiel that he works at a wirehouse and…Behavior rewarded is behavior repeated, a leopard does not change its spots, and if you tell me how you are paid, I will tell you how you will behave.

Teresa Vollenweider

Teresa Vollenweider

June 19, 2014 — 12:38 AM

Better name for Merrill Lynch Clear is Merrill Lynch Opaque or Merrill Lynch Cloudy or Merrill Lynch Dark.

Grant Barger

Grant Barger

June 19, 2014 — 1:45 AM

Another great article… You continue to vigilantly document the evolution of this industry from the perspectives of all parties involved. (Especially in the comments, never delete those!) Complete transparency is the only way in which to restructure an industry that has proven itself devoid of trust (Top down, nothing personal.) since its inception. Keep tearing down the walls, Brooke and soon everyone will be able to take a peak behind the curtain. Thanks, for your continued stewardship within and for the financial services industry.


Brooke Southall

Brooke Southall

June 19, 2014 — 8:58 PM

Thank you, Grant, and the commenters who helped spark your comment.



Ron Rhoades

Ron Rhoades

June 20, 2014 — 6:36 PM

Great article, that highlights just another evolution of the path in which the warehouses build trust, and a fiduciary relationship as a result, then seek to “remove the fiduciary hat” via disclaimers and agreements and turn around and sell expensive, and often proprietary, products.

The broker-dealer firms are pulling out all the strings to market themselves as trusted advisors, while heavily lobbying against the application of the fiduciary standard. Hopefully, the SEC will WAKE ITSELF UP someday and: 1) Rule that those who provide financial advice are fiduciaries, however they are registered; 2) Declare that once you are a fiduciary, you remain a fiduciary to that client;’ 3) Not permit core fiduciary obligations to a client to be waived (since when would a client ever provide informed consent to be harmed).

In the meantime, bona fide fiduciaries will need to distinguish themselves, through educating clients to ask all the right questions of financial services providers – and getting clear answers in writing.

Brooke Southall

Brooke Southall

June 20, 2014 — 6:44 PM


Thank you for adding your thoughts but I am hoping you might elaborate. What exactly does it mean in point 2 that once you are a fiduciary that you remain one? In what instances would the ground shift under a client’s feet and how is that currently, implicitly or otherwise, permitted?


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