When Lyle LaMothe quit as head of Bank of America's Merrill Lynch brokerage force, the bank's flacks described it as a "retirement."
Now we know that wasn't the whole story.
Sallie Krawcheck, who was then running both the Bank of America US Trust and Merrill's wealth management businesses, said very gracious things about him. LaMothe himself played along, saying he was going to focus on "personal interests."
But that story line never made much sense. LaMothe had been at Merrill for 20 years but he was still a young man at the age of 49. The idea that he was going to "retire" struck the people at Merrill who knew him as ludicrous.
Here's what Net Net wrote in April 2011, about a month after LaMothe announced his alleged retirement:
The real story, however, is that LaMothe—who is only 49 years old—did not just “Retire.” He left after clashing with Bank of America’s management over efforts to get Merrill brokers to sell more banking products to their clients, people familiar with the matter say. Many brokers feel that these efforts sometimes conflict with their ability to pick the best financial strategies and products for their clients.
One person familiar with the matter said that the LaMothe retirement was a sign that Bank of America still has a long way to go before it can call the merger with Merrill a success. In fact, some at the bank say clashes between brokers and bankers are getting worse.
“In terms of the culture clash, this is where the rubber meets the road,” a senior executive at the Bank said.
At the time, Bank of America disputed this account. But in his first post-Merrill on-the-record interview, LaMothe makes it clear that this is exactly what happened.
Joe Giannone of Reuters reports:
When LaMothe abruptly left one of the highest-profile jobs on Wall Street last May, he cited personal reasons. But in his first interview since then, LaMothe, 50, said he had "philosophical" differences with the way Bank of America Corp approached wealth management, emphasizing the goals of the bank rather than specific needs of Merrill's brokers and clients.
"I know some people can thrive in that format, but I'm not one of them," said LaMothe, who joined Merrill in San Bernardino, California, as an adviser in 1987 and became head of Merrill's 16,000-strong brokerage force in 2008. "I didn't get into the financial services business to be a commercial banker."
...While Merrill Lynch and LaMothe said that brokers are not forced to pitch loans and banking products, a number of Merrill advisers complain of feeling such pressure at a company that emphasizes cross-selling, one reason many former brokers have said they left Merrill over the past two years.
LaMothe says combining bank and brokerage under one roof "makes perfect sense," but there are limits. "You cannot pressure good advisers to sell a product: they simply won't do it. It's almost counter-productive."
That line about commercial banking can be taken as a coded attack on Bank of America . When LaMothe says "I didn't get into the financial services business to be a commercial banker," he is likely referring to the management changes at Bank of America that followed his resignation. Krawcheck pushed for Andrew Seig to replace LaMothe but was overruled by Bank of America chief Brian Moynihan, who favored former John Theil.
Both men had a background as financial advisers. But Seig was a favorite of Merrill's "thundering herd" because he was thought of as being philosophically closer to LaMothe. Theil was thought of as a "products guy" who would inevitably push Merrill brokers to sell Bank of America banking products.
After Theil was appointed, Bank of America spun the story to make it seem that Krawcheck favored Theil over Seig. But, as we reported, this just wasn't true. And six months after LaMothe's retirement was announced, Krawcheck herself was forced out by Moynihan.
And, to wrap this up, here is where the LaMothe commercial banking line hits. After Krawcheck was pushed out, the heads of US Trust and Merrill started reporting to David Darnell—the head of Bank of America's commercial banking arm. In short, LaMothe is quietly attacking Darnell, Theil and Moynihan.
LaMothe was a Merrill customer before he was a broker. His wife noticed that he seemed more interested in his broker's job than his own work selling insurance and recommended that he apply for a job.
These days LaMothe is running a consulting business aimed at advising brokers, brokerages and others in the wealth management business. And his central piece of advice seems to be don't do what Bank of America is doing.
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