Bank of America's Darnell Seeks to Reassure Nervous Merrill Brokers
The newly minted co-chief operating officer who oversees Merrill Lynch's 16,000 brokers hosted a conference call Wednesday in attempt to quell fears in the wake of Sallie Krawcheck's exit.
David Darnell, who was elevated to be co-COO along with Tom Montag, will oversee all of Bank of America's consumer business, including its wealth-management business. He had run the bank's commercial-banking business, which will now fall under Montag's control.
Darnell told brokers on the conference call that the firm would not change the way they are compensated, according to people who listened to the call. Many Merrill brokers, who are paid commissions based on client business they produce, fear that Bank of America will attempt to change their compensation into a salary plus a discretionary bonus.
The protection of the compensation model has long been a concern among Merrill brokers. The other wealth-management unit at Bank of America, U.S. Trust, uses a salary plus bonus system.
"He told us the the unique culture and comp will stay in place," said one financial adviser who listened to the call.
Darnell is not a complete stranger to the brokers. As head of commercial banking, he helped win some business for the brokerage and brokers helped him win business for the commercial bank, according to people at the firm. But this raises fears that he will push hard on "cross-selling"—the practice of selling other banking products to brokerage clients. Some brokers feel that when cross-selling goes to far it can compromise client interests.
There is certainly a lot of skepticism about Darnell's ability to effectively lead Merrill Lynch.
"The big producers at Merrill, there's no way they are going to work for a commercial banker," one former Merrill employee told me.
Darnell's conference call Wednesday was the first step in an attempt to repair what seems to be an already broken relationship between the senior management at Bank of America and the Merrill Lynch brokers.
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