Bank of America’s Merrill Lynch to Ban Trainee Brokers From Making Cold Calls
Bank of America Corp.’s
Merrill Lynch Wealth Management unit is banning trainee brokers from making cold calls, a vestige of an era when the industry pushed hot stocks on anyone who would pick up the phone.
Merrill on Monday rolled out a revamped adviser-training program that prohibits participants from cold calling and directs would-be brokers to use internal referrals or LinkedIn messages to land clients instead. The decision comes after the program’s 3,000 trainees were told to stop outbound recruiting efforts to find new customers last year after problematic phone calls.
The announcement formalizes a shift that executives have signaled for months. “We are leaning much more heavily on leads and referrals from the broader company,” Merrill President
Andy Sieg
said in April. “There is also an opportunity to be much more modern in terms of the way we are reaching out to prospective clients.”
Merrill’s training program, first established in 1945, was meant to be the firm’s pipeline for new advisers after it cut back on the expensive practice of poaching from other firms. The pool of candidates that starts off in the program, which pays a base salary of $65,000 a year, is typically young and diverse. Participants who fail to meet the goals are kicked out or moved to other roles in the bank.
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In recent years, only a small portion of trainees completed the program. Successful recruits often had extensive personal networks and were less reliant on cold calling, trainees said.
While cold calling offers the opportunity for a gifted salesperson to build a network from scratch, it is hard to succeed that way in an era when no one picks up. Personal referrals lead to a response around 40% of the time, Merrill executives said, but less than 2% of people who are cold called even answer the phone.
The revamped program is intended to bring the firm’s prospecting techniques into the digital era and boost completion rates. It is also another step in integrating Merrill’s storied “thundering herd” of financial advisers more closely into Bank of America, which bought the brokerage in the depths of the financial crisis.
The changes are also intended to make it easier for trainees without an existing network to succeed. “We’re going to open up the possibility of a career in wealth management to a much broader selection of individuals,” Mr. Sieg said on call with reporters Monday.
Trainees will get more referrals from the bank’s pool of 66 million retail customers, people familiar with the matter said. They will also be encouraged to contact prospects over LinkedIn, which has a higher hit rate than cold calling, they said.
Cold calling has been a mainstay of adviser-training programs across the industry since their inception. As stock ownership became widespread in the 1980s, brokerage firms hired droves of young trainees to work the phones.
When Frank Maselli joined Dean Witter in 1983 as a rookie broker, he was given a seat in a cavernous room filled with other trainees where he made 1,000 calls a day from 8 a.m. to 9 p.m.
“I have a bond, I have it for two days, it might be gone tomorrow,” he would tell the strangers who picked up. About 1% of the people he dialed would bite, a rate that was considered successful, said Mr. Maselli, who now runs a firm that trains advisers on sales techniques. After a few years, trainees…
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