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Merrill Lynch

Transcript: -Merrill, Lynch began as an investment bank. It specialized in underwriting the securities of chain stores, which started to gain popularity in the 1920's. -Invested in Safeway Stores in 1926 and it became the #3 grocery store in the country. --> Purchased 80% of the outstanding stock for $3.5 million Improved Credit Ratings lower interest rate After 2001, the real estate boom accelerated. in order to service the market, Wall street created a number of financial instruments which mainly lead to decline of Merrill Lynch Collateralized Debt Obligation(CDOs) Mortgage-Backed Securities The Great Depression Merrill Lynch's Beginning Stanley O'Neal 2nd to last CEO and Chairman of Merrill Lynch (2002-2007) Held most accountable for the company's downfall Abandoned the "Mother Merrill" foundation Wanted to make Merrill more like Goldman Sachs Known for his single-minded approach to running the firm Ousted many of his top executives and isolated himself Said that to generate higher returns, the firm should take on more risks Merrill Lynch What could federal regulators have done to avoid these problems? -In 1941, the firm acquired a New Orleans brokerage firm called Fenner & Beane. -The firm made revolutionary actions when they set out to educate the public. --> Ran ads with titles such as "What Everybody Ought To Know About This Stock And Bond Business" -->sponsored investment seminars for women. -1929: Merrill, Lynch was prepared for the stock market crash; however, they decided to sell the firm's retail operations to E.A. Pierce & Company. -1935: Merrill, Lynch and E.A. Pierce bought Cassatt & Co., an investment banking firm from Philadelphia. -1938: Lynch passes away. -1939:Pierce convinced Merrill to join forces. -1940:This merger created Merrill Lynch, E.A. Pierce & Cassatt. Government were faced the decision of attempting to save the financial system from systemic failure at the cost of creating moral hazard. Bailout by government will encourage risk behavior. cost of borrowing money decreased Other Players What should be done for the future? when the price of housing began to fall, the demise began. One of the factors that contributed to the financial crisis of 2008 is the breakdown of the sub prime mortgage loan market. Merrill Lynch, which known as" Bullish in America" used to be pretty confident in their ability to handle the mortgage markets. Nevertheless, in year 2008, Merrill Lynch lost up to $19.2 billion, struggling to raise capital from sovereign wealth funds and other investors, and sell risky assets. On September 15, 2008, Merrill Lynch agreed to be bought by BofA for $29 per share. 1. Feds transfered 25 billion dollars to BoA to purchase Merrill Lynch 2. Boa and Merrill Lynch used this money to pay the investors and bonus instead of keeping the job. 3. Merrill lynch is too big to be fail. the Demise of Merrill Lynch Improved Risk Management and Regulation The Future of Merrill Lynch John Thain Took over as the last CEO and chairman of Merrill Lynch Ultimately forced to sell the company to Bank of America in September 2008 for about $50 billion or $29 a share Thain then paid his traders and executives $3.6 billion in bonuses before the deal closed without informing the public Merrill's losses were actually worse than expected and BofA required a government bailout of $45 billion in direct government loans Had Merrill Lynch not been saved, the economy would have been impacted immensely Merrill Lynch, now called Merrill Lynch Wealth Management is the wealth management division of BofA and is a provider of corporate and investment banking services with more than 15,000 employees and approximately $2.2 trillion in client assets The Tradeoff between moral hazard and systemic risk Benefit of bailout Major Players Involved Cost of bailout How is Merrill Lynch involved in this crisis? 1. In the beginning of this century, interest rates were relatively low, investors were spurred to seek for high return. 2. Subprime mortgage: lend to the people with low credit rating. 3 Securitization: Package these mortgages into a pool, then investment banks sell these pools to investors. housing boom 1. Borrowers could not refinance their mortgage. 2. Value of asset backed securities held by Merrill Lynch fell. 3. Market lost confidence to Merrill Lynch. 4. Merrill Lynch recorded a loss of 14.7 billion dollars in first quarter of 2008 THE DOWNFALL 1. Saved Merrill lynch, saved thousands of jobs. 2 After the purchase, Boa got wealth management department. 3. Merrill Lynch is too big to fail, build up the market confidence. Why Subprime Mortgage is ideal for securitization? Another Important Merger -Charles E Merrill and Edmund C Lynch were roommates in 1907. -Merrill started Charles E Merrill & Co in 1914, very shortly after is joined by Lynch creating Merrill, Lynch & Co. 1. Merrill lynch was the biggest brokerage firm 2. As a newcomer in the subprime mortgage, Merrill lynch invested billions in MBS (mortgage backed

MERRILL LYNCH

Transcript: A YOUR LOGO HERE C 3 CASE STUDY BY : ARUSH BHATNAGAR UTKARSH VARDHAN LABDHI DAFTARI MERRILL LYNCH : SUPERNOVA MERRILL LYNCH Established in 1907 Merrill Lynch was often credited for bringing the WALL STREET to the MAIN STREET. Delivering services to individual clients (retail brokerage) through stock broker and financial advisory services. Leading financial services firms in the world and was the largest of the broker dealer firms on Wall Street in 2003 (as per Exhibit1). Their unique differentiators were: Wide network of 14000 financial advisors and 750 offices in U.S. Widest array of financial services & Products, sound advice and effective execution Global Partners Culture of Innovation Merrill Lynch INTRODUCTION FA's SUPERNOVA Supernova Name given to a new way to manage client relationships that originated in one of Merrill Lynch’s Indianapolis offices. A strategy set at the top. Father of SUPERNOVA- “Rob Knapp”. Merrill Lynch’s Mid-West District. SUPERNOVA SUMMARY Supernova was spread through road show presentation. Knapp used two part pitch to “Sell” supernova. 1. The ultimate client experience. 2. Plan process and discipline. It was service orientated not transaction orientated Process of Supernova WHAT IS SUPERNOVA Was the supernova description of what client’s minimum annual contact with their financial advisor should be : 1. 1 2 monthly contacts 2. 4 were portfolio reviews 3. 2 were face-to-face meetings Predicated upon the completion of a financial plan for the client at the beginning of the relationship. 12-4-2 12-4-2 SEGMENTATION Supernova provides administrative support. Administrative support through Client Associates by way of daily Folder System. Each folder clients details. Service promise You will have a multi generation financial plan. You will be contacted by FA at-least 12 times every year. Response within one hour and resolution within 24 hours ORGANIZATION ORGANIZATION Each year FA to acquire some new, high-quality clients . Least promising clients displaced by new clients to another FA, or Financial Advisory Canter . FA find 2 to 4 hours everyday for client acquisition, which FAs found more adequate. ACQUISITION (The final part of supernova) ACQUISITION Increased compensation Greater client loyalty Greater level of organization of work Payment by Merrill Lynch for those clients sent to the center WHY FA SHOULD ADOPT SUPERNOVA Economic backdrop Politics and Recognition Organizational Leverage Points Follow Up/supports Client expectation Challenges to implementation IMPLIMENTATIONS Changing Role of some FAs Misinterpretation METRICS FA Nature Inclusion of client associates Challenges to implementation Conclusion Call of action A supernova FA commented: Historically, when we sold a product to a client, Merrill Lynch made money and the FA made money. Supernova helps to solve the dilemma. It provides a business process - not a product. Which was never there before. Success Of Supernova: Market errors were declined by 54% Revenue was increased by 1% $58 millions Increased in Annual Profit Proper training should be given to the FAs and client associates so that the FAs are able to fulfill the service promised. The employees should be trained to run segmentation software and implement folder system. Local managers should coach the average new adopters to begin acquiring as early as possible. Provide Knowledge to the FA’s about their work life balance benefits that could be gained through Supernova. Providing the clear vision and purpose to FA’s by filling up the communication gap , in order to avoid any misinterpretations created about the Supernova. Grade and incentives Rationalization according to the compensation benchmarking Improving the organization culture and create discipline by bringing about transformational change. Recommendations OUR FINDINGS HAVE A WONDERFULL DAY :) THANK YOU

Merrill Lynch

Transcript: In the Supernova 12-4-2 model what does FA offer the client -12 __________ - 4 __________ - 2 __________ FAs did not pay attention to frequency of contact FA's began separating their clients into organized lists 2,000 Financial Advisors have completely adopted Supernova 4,000 had partially adopted Supernova Not sufficient Merrill Lynch has 15,000 FAs History of Merrill Lynch FAs brought in clients through different ways The Supernova Service Promise Did not make calls to clients 1970 - Powerful Force in Investment Banking Selling Supernova The Team Feud!!! FAs were very well paid The minimum requirement What is one of the three things you are guaranteed with the Supernova Service Promise? Merrill Lynch enjoyed the reputation for being an attractive place to work Adopting & Implementing Supernova 4 portfolio reviews 1. The Financial Advisor "Buy In" 2. Segmentation 3. Adoption Financial Planning 12-4-2 Organization Acquisition Merrill Lynch Supernova Team 4 What is Supernova? The new way to manage client relationships Team 3 vs. Team 5 18 months after implementing Supernova, Knapp's district vastly improved placing them in 4th for customer satisfaction FAs were trying to keep their heads above water 2000 - Preeminent Financial management and advisory company Originated in Indianapolis Why Merrill Lynch had many FAs Term used by Merrill Lynch Changes needed to be made Before Supernova 2003 - One of leading financial services firms in the world and largest broker on Wall Street Semifinal Round FINAL ROUND Financial Advisors Organization The Supernova Steps Lists consisted of clients with highest revenue gain, most assets, or whether the FA enjoyed doing business with the client Team 6 vs. Professor Bussone Founded in 1908 Time management How clients behaved in the past versus now The Folder System The Folder practices accomplish four things: 1. They force the FA to make good on 12-4-2 without increasing their administrative burden 2. FAs have the most up to date information for their meeting 3. Induce "Folder Guilt" 4. Makes sure the financial plan agreed upon was implemented FAs enjoyed the Autonomy of their jobs Economic Backdrop Corporate Politics Client Expectations Changing Roles of Financial Advisors Supernova Success "Ultimate Client Experience" Plan, Process, Discipline Control of Time Service Oriented Employee This allowed FA's to provide the "ultimate" service to clients they deemed worthy How many FAs have COMPLETELY switched to Supernova by the time this case was written? Failed to exceed in customer satisfaction. Knapp ranked LAST out of 32 districts - from 550 to 200 2 face to face meetings The time was available Team 1 vs. Team 2 Results (75 Supernova Users) Market Errors declined 54% Increase revenue of 1% Non-Supernova decreased 6% Happier Clients Projections $130 Million annual increase in FA production $6.6 Million annual reduction in errors $58 Million increase in annual profit What is the FA's list of clients who have an account at the firm called? Results & Projections Who is the "father" of Supernova? The father of Supernova is Rob Knapp Challenges Knapp was successful in terms of revenue for the midwest district of Merrill Lynch Time was spent prospecting 12-4-2 Segmentation The "ultimate" client experience You are guaranteed three things: You will have a multi-generation financial plan in place You will be contacted by your FA at least 12 times a year You will receive rapid response to any problem you may have, hearing from us within 1 hour and having resolution within 24. Come from a variety of different backgrounds The final part of supernova The time dedicated to 12-4-2 left about 2-4 hours each day for client acquisition Many FAs found that referrals were their best source of new business Transactional FA's "Once you call your client a few times having no intention of selling anything, it's a lot easier to sellthe next time you call. Supernova also helps because it increases my knowledge of the cliet - when you know someone better, you can figure out what their needs are - and sell them what they want." Acquisition 12 monthly contacts

Merrill Lynch

Transcript: Pay number 1 financial advisers in their state educate investors can help to create custom banking plans shipping in autos/transportation sector staffing services in consumer-discretionary/services sector health and wellness in consumer-staples sector wireless in utilities/communication sector There are no secrets to success. It is the result of preparation, hard work, and learning from failure. -Colin Powell founded on Jan. 3, 1914 by Charles E Merrill Firm on Wall Street Bank of America. in 2008 Statistics History Top Competitors: * Edward Jones * Union Bank *Wells Fargo Bank - At Merrill Lynch our mission is to help clients identify and pursue their goals in `every stage of their life. From the birth of a child to sending children to college, planning for healthcare costs in retirement to leaving the legacies they desire. We help clients seek their preferred lifestyles through a one-on-one relationship with an experienced financial advisor. We are committed to client needs, delivering the investment insights of Merrill Lynch while offering access to the banking convenience of Bank of America. Education and Background Leadership * Finance, commerce or accounting major * Bachelor’s degree * Pass FINRA exams * Finance markets, corporate accounting, mathematics, economics, and securities analysis Special Competitors banks credit card companies insurance investment bankers financial planners security exchanges Hartmann, John. "The History of Merrill Lynch in 90 Seconds (roughly)." YouTube. YouTube, 26 Jan. 2013. Web. 21 Apr. 2015. < "BofA Merrill Lynch Leads The Brokerage War With $2T." Forbes. Forbes Magazine, n.d. Web. 21 Apr. 2015. "Merrill Lynch Salaries | CareerBliss." CareerBliss. N.p., n.d. Web. 21 Apr. 2015. "Top 7 Non-Financial Skills Required In Finance." Investopedia. N.p., 18 July 2010. Web. 21 Apr. 2015. "Requirements for Investment Brokers." Work. N.p., n.d. Web. 21 Apr. 2015. "CHARLOTTE-SOUTHPARKÂ ." N.p., n.d. Web. 21 Apr. 2015. "Industry Insights – Key Trends Facing the Investment Management Industry ." Industry Insights – Investment Management. Turner Investments, 2015. Web. 02 Apr. 2015. "A Brief History of Investment Services Industry - Finance Train." Finance Train. Finance Train, 05 Oct. 2010. Web. 02 Apr. 2015.​​ Merrill Lynch * Global investment banks * Investment backing department of large commercial bank * Venture capital terms employees earn $65,000 annually on average 0r about 31 an hr. Net income was $724 million 32% of Bank of America's total income $4.6 billion revenue * President of Charlotte Branch-John 29 years Gettysburg College started in New York on July 15th, 1985 from New Jersey * Vp- Dan Brienza Merrill Lynch since 1994 Wake Forrest Citations investment Financial Advisor (35) Salary $29,838 - $330,000 Bonus $685 - $49,665 Commission $5,068 - $532,616 Profit Disbursement $1,385 - $27,572 Total Pay $47,884 - $370,951 Trends Mission Statement Career Paths

Merrill Lynch

Transcript: Sales Volume 3. Competition Focus & Mission Statement 8. Training 3. Stage 2 -Development 12 Months Merrill Lynch's ability to deliver a power house of knowledge and skills to corporations, institutions, governments and individual representing a broad array of financial goals. John Thain (CEO) Social Media Training & Engagement Strategic Objectives 5 .Account Relationship Strategy 6. Organizational Structure Any Questions? Industry Size Stage 3 12 Months Stage 1 - Training 12 Months University Outreach 8. Training Citigroup Wells Fargo Morgan Stanley Goldman Sachs Group Economic turmoil, restrictions in capital markets and bad publicity Weak wholesale banking operation, failed public relations, extremely limited social media presence and loss of employees to top competitors 6. Organizational Structure Each Financial Advisor needs to demonstrate: Capable Intellectually Honest and Trustworthy 6. Organizational Structure U.S. Private Client Group International Private Client Group Asset Management Group Corporate and Institutional Client Group Strong Social Media Presence Merrill Lynch Thank You For Your Time Three Main Objectives 5. Account Relationship Strategy 1. Company Description Develop Existing Sales Force We will train all members of the company specially our Financial Advisors on how to use Facebook and Twitter. Expected Accomplishments (cc) image by anemoneprojectors on Flickr 10. Evaluation Foundation Built with Future Investors 3. Competition Merrill Lynch's clients generally consist of individuals or businesses with at least $250,000 of investable assets More than two-thirds of Merrill Lynch Global Wealth Management relationships are with clients who have a net worth of $1 million or more 2. Industry Increase in Assists Under Management through a Strong Client-Advisor Relationships Placing their client relationship first while proudly conducting business based on five unwavering principle. Client Focus Respect for the Individual Team Work Responsible Citizenship Integrity Five Stages Client Focus Respect for the Individual Teamwork Responsible Citizenship Integrity Issues Relationship ` Products & Services Educate sales team on cultural food and different wines Educate on wine pairing to improve conversation topics Connecting with Client is important. First two years see if it is effective by monitoring the client/sales rep relationship See if we get more referrals Continue and tweak if it is successful 9. Code of Ethics 24-week golf league Pair advisors at intermediate/advanced levels with their peers 8 playing opportunities over the 24-week period Client-Advisor Tournament at series end Five International Regions 7. Recruiting and Selection Golf League & Instructional Series 1. Company Description Universal Hiring Process Sourcing Talent Assessment Behavioral Interview High-achiever Interview Discovery Process Deep dive Interview Hiring panel 2. Industry 5-week golf instruction program for beginners Client-Advisor Tournament "Our corporate culture at Merrill Lynch is the sum total of what we believe and think, how we work together as colleagues an how we conduct ourselves as individuals. It is the way we treat our clients, our shareholders, our fellow employees, our neighbors and the public in general, it is who we are." Set up an account for every Financial Advisor so their clients can follow them and refer their friends in order to get tips and promotions. Four business sectors: Orientation and licensing Earn Series 7 license Earn Series 66 license Training Business Development Investments & Financin Business Management Relationship Management Planning Skills Assesment Sales & Sales Management Recognized as one of the best training programs in the industry. New hires supplement critical skills they already have with the knowledge necessary to become a successful Financial Advisor. Trainees learn necessary skills acquire clients, build relationships, and create successful wealth management practice. Food & Wine Merrill Lynch’s main goal is to build a lasting a profitable relationship with every client through customized financial strategies, advice and guidance in every investment. Practice Management Development (PMD) Program The Sovereign debt issues regarding the European peripheral countries Recapitalization of European banks The earthquake in Japan Quantitative easing by the FED's Expected Outcomes Selection: 5 Principles Facebook 9. Code of Ethics 1. Company Description Trainees begin production Top performers attend PMD Excellence Programs: Additional two years of advanced training designed to develop exceptional advisory skills across various wealth management areas to serve affluent clients Have our advisors implement Social Media, so they can connect not only with the future generations but also with their high-net worth clients. Estimated at $1.5 trillion in clients assets as of March 31, 2012 Group of experienced investment professionals who average 14 years of industry experience.

Merrill Lynch

Transcript: Market 2000+ More broad than current HOLDRs offering 50-stock basket covering multiple sectors Represents top-capitalized stocks Current HOLDRs 20-stock baskets representing sectors such as the Internet Represent groups of stocks in different sectors while Market 2000+ represents the leading companies in global market 7. What actually happened Sooo, Should they? 2000+ HOLDRS Merrill Lynch Merrill Lynch Pros Move forward with Market 2000+ HOLDRs ETF's Pros & Cons of Market 2000+ Pursue Andrea Falling Cons History Presenters Failure could decrease creditability Change in strategy could confuse Competition Abandon Can only buy/sell at the end of the day Taxed on capital gains each period/year? Actually own the commodities or stocks Market 2000+ HOLDRs vs. Current HOLDRs 3. ETF's vs. HOLDRs First, we need some info! Three Depository receipts No diversification/ concentration requirements Minimum of 100 HOLDRs If company removed, stock is not replaced No management or underlying index Lower fee structure ? What the etf is a HOLDRs? What actually happened Should Merrill Lynch pursue or abandon Market 2000+ HOLDRs? 5. Pros and Cons HOLDRs Recommendations Two Caitlin Keith Key Facts: 1. Mutual Funds vs. Exchange Traded Funds (cc) photo by medhead on Flickr ETF's vs. Question: 6. Soooo, Should they? 2. History of ETF's HOLDRs (cc) photo by medhead on Flickr Opportunity to compete in broader market place Covers mulitple sectors Area for revenue generation New level of transparency and efficiency Attracts more capital to the markets Mutual Funds Unit investment trusts Requirement for diversification & concentration Minimum of 50,000 ETF shares No one single stock can exceed 25% of total assets Indexes change & rebalance with regularity Typically have lower initial investment What the etf vs. Market 2000+ HOLDRs (ETF) Questions? 4. MKT 2K+ vs. HOLDRs One John Simard What is a Mutual Fund? 1990 - Toronto Index Participation Shares traded 1993 - First ETFs traded in the U.S. 1996 - WEBS introduced 1998 - "Sector Spiders" launched that follow 9 sectors of S&P 500 1999 - HOLDRs introduced 2005 - Vangaurd Group entered the market 2010 - 916 ETFs with $882 billion in assets

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