Building Trust Through A Consistent Client Experience

1
Building Trust Through A Consistent Client
Experience
Robert J. McCann Vice Chairman, Wealth
Management Merrill Lynch Co., Inc. Tower Group
2004 10th Annual Financial Services Business
Technology Conference May 21, 2004 Boston, MA
2
Industry Returns to Profitability
Source Merrill Lynch Investor Relations
Composite includes BSC, C, GS, JPM, LEH, MER and
MWD
3
Trust Takes a Hit
Investors citing dishonesty as main issue facing
securities industry
50
43
41
40
30
20
9
10
8
7
0
1999
2000
2001
2002
2003
Source SIA 2003 Investor Survey
4
The Tech Bubble Bursts
March 2000 Peak
8 trillion in value destruction
October 2002 Trough
Source Merrill Lynch Economics
5
High Profile Scandals

• Accounting scandals
• Celebrity prosecutions
• Research independence
• Mutual funds

6
How to Restore Trust?

• Market recovery
• Honest accounting
• Level playing field
• Objective advice thats suitable
• Holistic approach to client needs

7
The Client RelationshipWhat do they Want?
64
61
56
Keeps my best interests at heart
Returns my calls promptly
A strong performance track record
48
45
Keeps me regularly informed about performance
Helps me develop overall investment strategy and
asset allocation
Source SIA 2003 Investor Survey
8
We Have the Total at Merrill Lynch
Retirement
Advice Planning
Credit Lending
Beyond Banking
Estate Planning Services
Investments
WE SEE YOUR FINANCIAL LIFE IN TOTALSM
Business Financial Services
Tracking Progress
9
The Wealth Management Process
10
Top Five Mistakes Brokers Make

• Allowing even a whiff of day trading
• Not updating paperwork
• Not taking notes
• Forgetting the heirs
• Embracing the unsophisticated, greedy client

11
Analyzing the Analysts

• The threshold question
• Does Merrill Lynch research add value?

12
A Decade of Research Out-Performance

• 1993-2002

Average quarterly return of research
recommendations
Merrill Lynch 3.07 CSFB 2.41 Morgan
Stanley 1.86 Goldman Sachs 1.93 Salomon Smith
Barney 1.11 Lehman Brothers 1.00
SP 500 2.26
Source Study by J. Randall Woolridge The
Journal of Investing, Spring 2004
13
A New Research Paradigm

• Team culture vs. star culture
• Absolute vs. relative ratings
• More selective sector coverage
• Cross-discipline, thematic reports

14
A New Research Paradigm
Independent research

• Reports from Morningstar, BNY Jaywalk
• Buy, Hold, Sell recommendations
• Client access via website, toll-free numbers
• Recommendations on statements, confirms

15
Building Trust Through A Consistent Client
Experience
Robert J. McCann Vice Chairman, Wealth
Management Merrill Lynch Co., Inc. Tower Group
2004 10th Annual Financial Services Business
Technology Conference May 21, 2004 Boston, MA