Bank of America changed its wealth management leadership in one fell swoop Tuesday evening when it announced the departure of top wealth management executive Sallie Krawcheck, a move that may actually point to a deeper commitment to the Merrill Lynch business.
Krawcheck’s departure comes just two years after she joined Bank of America in 2009 following executive roles at Citigroup and Sanford Bernstein. Despite a spate of bad news that has battered Bank of America in the last month, from mortgage woes to a sinking stock price, its Merrill Lynch wealth management business has continued to perform.
That led to some speculation that Bank of America could look to sell the Merrill Lynch business.
But Tuesday’s move may reaffirm Bank of America’s commitment to Merrill Lynch, said Alois Pirker, research director at Boston-based financial services research firm Aite Group.
“I think BofA has made the decision to hold onto Merrill, and if it takes a leadership change, then so be it,” Pirker said.
Krawcheck’s departure from Bank of America might actually signal more of a difference in opinion on direction, he said, rather than a change in direction for the wealth management business.
Bank of America Chief Executive Brian Moynihan’s move to shake up the leadership ranks at the firm comes as the nation’s largest bank by assets continues to work through its 2008 merger with Merrill Lynch and on the heels of a $5 billion investment from Warren Buffett's Berkshire Hathaway.
David Darnell, head of commercial banking, will now serve as co-chief operating officer for wealth management and other businesses directly affecting individual investors. Fellow co-chief operating officer Tom Montag will oversee BofA’s banking and markets activities.
The new leadership should streamline Bank of America’s leadership and usher in a new regime under Moynihan, Chip Roame, managing partner of financial services consulting firm Tiburon Strategic Advisors said via email Tuesday.
“I love the moves. It's a far more simple organizational chart. It’s far more client focused. It’s far fewer levels,” Roame said. “[Bank of America] was a top-heavy organization after so many mergers.”
And while some industry observers praise Moynihan’s move, it could be more difficult to win over Merrill Lynch’s financial advisor ranks after a month of challenges for the firm.
Tuesday’s events could be seen as more bad news with the departure of a key executive, said Danny Sarch, president of White Plains, N.Y.-based financial services recruiting firm Leitner Sarch Consultants.
“I find it fascinating that everybody says that the Merrill Lynch part of the firm has been propping the firm up and yet the woman who was running the Merrill Lynch part of the firm is the one” to leave, Sarch said.
Going forward, how the new leadership is perceived in relation to the bank versus the brokerage will also be important, said Bill Willis, president and chief executive of Willis Consulting.
As recently as April, when the U.S. wealth management leadership slot was filled by John Thiel, who came up through Merrill Lynch, it was considered a nod to the firm’s heritage.
“I am not sure that there will be a lot of financial advisors who will be heartbroken over the news,” Willis said of the end of Krawcheck’s short term. “On the other hand, there may be some that are.”
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