Building Trust Through A Consistent Client Experience
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Transcript of Building Trust Through A Consistent Client Experience
Building Trust Through A Consistent Client ExperienceRobert J. McCannVice Chairman, Wealth ManagementMerrill Lynch & Co., Inc.
Tower Group 200410th Annual Financial ServicesBusiness & Technology ConferenceMay 21, 2004Boston, MA
Industry Returns to ProfitabilityNet Revenues (Index)
Composite
50
75
100
125
150
175
3/01 6/01 9/01 12/01 3/02 6/02 9/02 12/02 3/03 6/03 9/03 12/03 3/04
Inde
x (1
Q01
= 1
00)
Pre-Tax Earnings (Index)
Composite
50
75
100
125
150
175
3/01 6/01 9/01 12/01 3/02 6/02 9/02 12/02 3/03 6/03 9/03 12/03 3/04
Inde
x (1
Q01
= 1
00)
Source: Merrill Lynch Investor Relations: Composite includes BSC, C, GS, JPM, LEH, MER and MWD
Trust Takes a Hit
Source: SIA 2003 Investor Survey
7%9% 8%
41%43%
0%
10%
20%
30%
40%
50%
1999 2000 2001 2002 2003
Investors citing dishonesty as main issue facing securities industry
The ‘Tech Bubble’ Bursts
March 2000 Peak
October 2002 TroughSource: Merrill Lynch Economics
$8 trillion in value destruction
High Profile Scandals
Accounting scandals
Celebrity prosecutions
Research independence
Mutual funds
How to Restore Trust?
Market recovery
Honest accounting
Level playing field
Objective advice that’s suitable
Holistic approach to client needs
The Client Relationship:What do they Want?
Keeps my best interests at heart
Returns my calls promptly
A strong performance track record
Keeps me regularly informed about
performance
Helps me develop overall investment strategy and asset
allocation
64%61% 56%
48% 45%
Source: SIA 2003 Investor Survey
We Have the “Total” at Merrill Lynch
Retirement
Credit & Lending
Investments
Tracking Progress
Business Financial Services
Estate Planning Services
Beyond Banking
Advice & Planning
WE SEE YOUR FINANCIAL LIFE IN TOTALSM
The Wealth Management Process
Set Strategy
Implement Solutions
ReviewProgress
Establish Objectives
Assessing Your Goals
Allocating Your Assets
Investment Proposal
Client Review Center
Top Five Mistakes Brokers Make
Allowing even a whiff of day trading
Not updating paperwork
Not taking notes
Forgetting the heirs
Embracing the unsophisticated, greedy client
Analyzing the Analysts
The threshold question:
Does Merrill Lynch research add value?
A Decade of Research Out-Performance
1993-2002Average quarterly return of research recommendations:
Merrill Lynch 3.07%
CSFB 2.41%
Morgan Stanley 1.86%
Goldman Sachs 1.93%
Salomon Smith Barney 1.11%
Lehman Brothers 1.00%
S&P 500 2.26%
Source: Study by J. Randall WoolridgeThe Journal of Investing, Spring 2004
A New Research Paradigm
Team culture vs. star culture
Absolute vs. relative ratings
More selective sector coverage
Cross-discipline, thematic reports
A New Research Paradigm
Reports from Morningstar, BNY Jaywalk
“Buy, Hold, Sell” recommendations
Client access via website, toll-free numbers
Recommendations on statements, confirms
“Independent” research
Building Trust Through A Consistent Client ExperienceRobert J. McCannVice Chairman, Wealth ManagementMerrill Lynch & Co., Inc.
Tower Group 200410th Annual Financial ServicesBusiness & Technology ConferenceMay 21, 2004Boston, MA