When Lyle LaMothe said on March 3 that he would step down from his post as head Bank of America Merrill Lynch’s U.S. wealth management business, industry speculation immediately set into motion regarding his replacement. And then the wait began.
LaMothe is scheduled to leave his position on May 1 to focus on personal interests. The industry suspense since LaMothe’s March announcement was put to rest on Wednesday, when wealth management division President Sallie Krawcheck named current head of the Merrill Lynch Private Banking and Investment Group John Thiel as LaMothe’s successor starting May 1.
Krawcheck addressed what she called “an extensive internal and external search” in part of the internal company memo sent Wednesday to announce Thiel’s promotion.
“I promised from the beginning of this process that we would be thoughtful in our selection of the next leader of Merrill Lynch – and I owe it to all of you and to our clients to make sure we have the strongest people possible in our key leadership roles,” Krawcheck said.
During the time between announcements, speculation as to reasons for LaMothe’s departure, candidates in the running to replace him and the delayed announcement have made for a quality of mystery, said Danny Sarch, president of White Plains, N.Y.-based recruiting firm Leitner Sarch Consultants.
“It’s interesting as to why it took so long because obviously he’s been there. It’s not like he’s an unknown quantity,” Sarch said. “He’s just taking on more responsibility.”
Industry experts called Thiel’s appointment a positive move, given that it boosts the Merrill Lynch culture by naming an insider to that brand as the firm continues to grapple with merging two cultures after the 2008 Bank of America Merrill Lynch combination.
Thiel worked his way up the Merrill Lynch ranks after starting with the firm as a Tampa, Fla.-based financial advisor in 1989. Since then, he has also held posts including regional director in Oakbrook and Northbrook, Ill., regional managing director in San Francisco and chairman to the firm’s leadership advisory council to management.
“A lot of what the Merrill advisors have felt all along is that Merrill is the asterisk or the footnote at the end of Bank of America’s statement,” said Mindy Diamond, president and chief executive of Chester, N.J.-based financial services recruiting firm Diamond Consultants. “They don’t feel terribly important or valued even though they’ve been the little engine that could.”
Thiel’s appointment signals a “pleasant surprise,” Diamond said, as rumors in the industry pointed to a conflict between Bank of America Chief Executive Brian Moynihan and Krawcheck as to which side of the business the appointment would come from. “Speculation was that if it was the bank vying the brokerage, that the bank would win,” Diamond said.
But Sarch said that despite sending a positive message to Merrill Lynch’s advisors, it might not be enough to squash their fears that Bank of America will dominate. Sarch said he spoke with Merrill Lynch advisors on Wednesday, who saw the firm’s installation of closed circuit cameras in their branches as a Bank of America move.
“This is certainly an effort by them, BofA, to show that ‘We hear you. We want to keep the Merrill Lynch culture,’ Sarch said. “That said, most advisors are cynical about the people at the top and it means very little to them.”
The Merrill Lynch business was a positive highlight of Bank of America’s first quarter earnings report earlier this month. Merrill Lynch’s revenue rose 18% and its client balances increased 7%. Bank of America’s global wealth and investment management net income increased 22% from the previous year, while revenue rose by 11% to $4.5 billion. Those results came as Bank of America’s overall income for the quarter declined 39%.
Thiel’s appointment could help Merrill Lynch further strengthen the business, given his experience selling a mix of products on the private banking side, said Alois Pirker, research director at Boston-based financial services research firm Aite Group. That could lead to the inclusion of more banking products in the total product mix for the Merrill Lynch business, Pirker said.
“It’s a good choice and it kind of bridges both: the need for an insider at Merrill Lynch, a respected person, and someone who has a vision to serve the client holistically and how to bring in multiple products to serve the client,” Pirker said.