Once upon a time, the Merrill Lynch advisor training program was widely considered the "gold standard" of industry training programs.
Industry recruiters interviewed by ThinkAdvisor this month were split on whether the wirehouse's new, shorter training program will successfully meet that same standard and achieve the firm's recently stated goal of having 1,000 trainees graduate each year once it's reached scale.
The wirehouse's new 18-month Advisor Development Program stands to significantly increase the success rate of the firm's advisors, from just 20% to 80%, the company said in June. The firm's old program ran 36 months.
Historically, Merrill had hired about 2,000 advisors into its training program annually.
'The Jury's Out'
In recent years, firms in the sector have been struggling to "figure out the secret sauce" to best train people to become advisors, according to Danny Sarch, president of the recruiting firm Leitner Sarch Consultants.
The new program is "interesting and it's different," he told ThinkAdvisor in a phone interview. But "the jury's out" and it's "way too early to say it's going to be successful or not," he said.
The old model the firm used, in which trainees made cold calls maybe "200 times in a day to hope to connect to a few people" willing to buy a municipal bond over the phone is a "laughable model in today's world with caller ID and suspicion of everybody," Sarch said.
That's why the company shifted away from cold-calling in recent years. Since then, Merrill has tried to find a more successful formula to train advisors, and its new program is the latest attempt, Sarch said.
"I think the industry needs it and I wish them luck," he said. "Merrill does have the advantage that the new training program" is based largely on the "broker-in-a-branch model," in which parent company Bank of America's branch clients are referred to advisors and that serves as "almost like a farm system" for the firm, he noted.
The Challenges of 'Shooting High'
Even if Merrill does have 1,000 advisors graduate from the training program after a year, the key question is how many of them will still be with the firm two years later, Sarch said.
Another challenge: Many people will not trust a young person to manage their money. So it's unrealistic to expect many will find success quickly, he said.
Meanwhile, some advisors are retiring later than they did historically, he said, noting younger advisors may get impatient in the meantime and flee the firm.
Merrill is "shooting high," he said, adding: "I give them credit for trying. But I'm sure internally, they're recognizing that only a certain percentage of those [1,000] will be successful. But the ones who do maybe are the future of the organization."
No More 'Gold Standard'
Agreeing with Sarch's skepticism, Tim Welsh, president of Nexus Strategy, told ThinkAdvisor it's "just a challenging way to train somebody when you put a sales goal on top of a professional development program."
With Merrill's new program, "there's probably a little bit more nurturing, a little bit more mentoring," according to Welsh. "But it's not that much different than what they've had."
The expectation is still for a new advisor to produce quickly, Welsh explained. "Maybe they think with this new approach the success rates will go up and so, therefore, they don't have to shove as many people through the funnel as they used to," he said. In his opinion, "they can shove a thousand people through it, but the results will not be any different than before," he said.
