Thiel puts brand on Merrill with shake-up

By Joseph A. Giannone

NEW YORK (Reuters) - John Thiel has moved out of Sallie Krawcheck's shadow, slashing Merrill Lynch manager jobs and taking steps to more closely align the firm's retail brokers and private bankers.

The move comes two weeks after Krawcheck -- who arrived with great fanfare in 2009 -- was ousted by Bank of America <BAC.N> Chief Executive Brian Moynihan.

Regional managers will oversee both the private banking and investment group (or PBIG) and the brokerage in each region, while ensuring their marketing efforts are coordinated and not in conflict.

Eliminating the parallel ranks of managers means one market leader will be responsible for delivering different products and strategies to different kinds of clients around the country. In theory, that will foster greater cooperation between the two groups of advisers.

That could address a challenge faced by banks that have separate advisers groups competing for the same clients.

Although many of Merrill's retail brokers have multimillionaire clients, the firm created the private banking arm in 2000 to attract ultra-wealthy clients who might otherwise go to a top-shelf wealth manager. PBIG, as it is known, has about 310 private wealth advisers.

Merrill's "Thundering Herd" of roughly 13,000 U.S. brokers generally serve clients with more than $250,000 to invest. The wealth management group oversaw $1.54 trillion as of June 30; the firm does not disclose its private banking assets.

Rivals Morgan Stanley <MS.N>, UBS AG <UBS.N> and Wells Fargo <WFC.N> also are working to develop businesses that appeal to different strata of wealth.

Thiel said the flatter management structure allows him keep closer tabs on clients and their demands.

"It's a structure that recognizes the differences from market to market and empowers managers, based on those differences, to design a growth plan that works for their advisors, their clients and, ultimately our company," Thiel said in a memo Wednesday.

Thiel, a veteran Merrill adviser, rose through the ranks over two decades. In 2005, he took the helm at the firm's private banking business for investors with at least $10 million.

The April promotion gave Thiel, 51, oversight of both the high net-worth business and Merrill's army of brokers.

"John Thiel is shaping Merrill the way he sees it," said a recruiter who asked to remain anonymous because he does business with Merrill. "He's become more empowered."

Merrill spokeswoman Selena Morris said the new structure increases ownership and accountability at the local level.

"It actually spreads power out, not consolidates it," Morris said.

Brokerages searching for savings have long targeted managers since they do not generally produce revenue. Morgan Stanley <MS.N>, eliminated dozens of managers when it combined its brokerage with Citigroup's <C.N> Smith Barney in 2009.

Aite Group analyst Alois Pirker, who met with Thiel Wednesday after the changes were announced, said the changes could make Merrill more responsive to customers.

But these separate high-end businesses also generate resentment. Many retail brokers manage very rich clients and do not like their work being viewed as downscale.

The new responsibilities could also overload managers who supervise advisers, say recruiters, impeding their ability to monitor broker activities and reducing the time they can spend helping advisers expand their practices.

"Managers at the big firms exist to take care of advisers and make sure the stay in compliance. It isn't clear if you can still service your adviser effectively with fewer managers," said recruiter Danny Sarch of Leitner Sarch Consultants.

The sweeping reorganization also creates more uncertainty in a firm still dealing with Krawcheck's sudden ouster and the ongoing financial and legal woes of its parent company.

"I'm not sure how this reorganization solves anything. It's shifting chairs around the Titanic," said Richard Schwarzkopf, a New York area recruiter. "I don't think it fixes anything beyond saving money, and that might prove short-sighted."

Bank of America has faced numerous lawsuits and regulatory actions over its mortgage lending practices during the housing boom. Mounting bills, including an agreement to pay $8.5 billion to investors in mortgage backed securities -- have forced the bank to slash 30,000 jobs and cut other costs.

(Reporting by Joseph A. Giannone; Editing by Jennifer Merritt and Bernadette Baum)