Merrill’s Gorman on Client Ownership, Priorities, Broker Pay

Who Owns the client…the brokerage firm or the broker?

October 11, 2001

Merrill Lynch retail chief James Gorman says the numbers answer that question quite clearly. “The experience is that when brokers leave they take 65% of their book,” Gorman told RR at a gathering of reporters in the firm’s offices at 717 Fifth Ave. in Manhattan this morning.

So retaining good brokers pays off? “Sure,” he said. “Merrill has the largest number of wealthy and affluent clients in the country, so clearly, investing in the financial adviser, building their competencies and providing resources is a very powerful tool.”

Asked whether Merrill would stop freezing client accounts when brokers leave the firm and clients want to follow them, Gorman reiterated a statement the firm has previously made, “Ultimately, you do what the client wants,” he said.

Gorman was named president of Merrill’s U.S. Private Client Group (USPCG) Sept. 20.

At the media briefing this morning he outlined some of his priorities for the firm’s 15,000 retail brokers, including “more of the same” emphasis on wealth management for affluent individuals, overhauling broker training programs and broadening the array of products and services they offer–especially banking services.

Gorman also announced that Bob Mulholland was promoted to fill his former spot as head of the firm’s Client Relationship Group. Mulholland was previously director of the Advisory Division, one of three units within Merrill’s USPCG.

As far as the firm’s new broker compensation package is concerned, Gorman said details would be delivered to regional managers in the form of a video some time over the next few months. He said the new package would be “very simple” and would reward brokers who are doing lots of planning, fee business and selling a broader array of financial products, including insurance and variable annuities.

Gorman told RR in September that the compensation package, contrary to popular belief among brokers, would not emphasize net new assets brokers bring into the firm. “It is a piece of the manager’s compensation, because at the end of the day they should be growing the business,” he told RR.

© 2001, PRIMEDIA Business Magazines & Media Inc. All rights reserved. Provided under license to This article is protected by United States copyright and other intellectual property laws and may not be reproduced, rewritten, distributed, redisseminated, transmitted, displayed, published or broadcast, directly or indirectly, in any medium without the prior written permission of PRIMEDIA Business Magazines & Media Inc.. Registered Representative magazine is online at

Nothing herein is intended as legal or financial advice. The law is different in different jurisdictions, and the facts of a particular matter can change the application of the law. Please consult an attorney or your financial advisor before acting upon the information contained in this article.

Return to The Securities Law Home Page 

Visit Beam & Astarita, LLC, securities arbitration, regulation and litigation attorneys and Sallah Astarita & Cox, LLC, New York Securities Lawyers

Securities Attorney at Sallah Astarita & Cox | 212-509-6544 | | Website | + posts

Mark Astarita is a nationally recognized securities attorney, who represents investors, financial professionals and firms in securities litigation, arbitration and regulatory matters, including SEC and FINRA investigations and enforcement proceedings.

He is a partner in the national securities law firm Sallah Astarita & Cox, LLC, and the founder of The Securities Law Home Page -, which was one of the first legal topic sites on the Internet. It went online in 1995 and is updated daily with news, commentary and securities law related links.