Hire Wire Sep 22 2011

BofA Revamps Wealth Management Units

By david benoit

Five months into his expanded role running Bank of America Corp.'s Merrill Lynch brokerage, John Thiel is restructuring the wealth management business inside the U.S.

The restructuring comes two weeks after Bank of America ousted Thiel's former boss and the face of the global wealth management group, Sallie Krawcheck, in a high-level executive shakeup.

Global wealth management is a key operation for giant Bank of America, and aside from Thiel's operations includes U.S. Trust and retirement services. In the first six months of the year, the group as a whole contributed about one-fifth of Bank of America's total revenue, with Thiel's group accounting for the vast majority.

In the changes, Thiel is decentralizing the power structure inside wealth management, splitting the country into 11 regional markets with new executives that will report to him. The group previously was built as four divisions that spanned the country.

Thiel's shakeup had been in the works since he took on the additional responsibility of running the bank's U.S. wealth management business in May. It follows a similar plan he initiated at the private banking and investment group, which caters to ultra-rich clients. There he also pushed the structure to respond to client needs instead of limiting what could be offered a client because of the banker's role. The performance of that group was a key reason Thiel was promoted.

As laid out in an internal memo Wednesday, the wealth managers and private bankers will be grouped by regions across the country with a "market executive" running both the brokers and private bankers and reporting to Thiel. The executives will be given specific strategies for that region, thereby differentiating, for instance, between the needs of clients in the New York metro region from those in the Heartland region.

"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 his memo. "It enables us to take a closer look at the real needs of clients across the wealth spectrum and give them whatever they need to reach their goals."

Bank of America Chief Executive Brian Moynihan often talks of aligning the business structures to fit more closely with the bank's customers. That theory led to the restructuring in the top management that left Krawcheck without a direct role reporting to Moynihan.

Thiel's memo says the wealth management restructuring is "client-driven" and will produce savings and reduce management levels, all reasons Moynihan also cited in restructuring the top executive ranks.

Moynihan is pushing for massive cost savings to be implemented across the vast consumer operations, which includes wealth management and is now headed by David Darnell. Moynihan laid out a plan two weeks ago to save $5 billion in costs, 18% of the annual amount spent on the consumer businesses, by the end of 2013.

Thiel's memo also says Greg Franks, who had been the director of wealth management's western division, will retire as part of the restructuring.

Meanwhile, Riley Etheridge will lead a team of four other managers that stretch across the country and focus on each client base. Etheridge, currently a regional head in the private banking and investment group, will report to Thiel.

David Benoit is a reporter for Dow Jones Newswires, where this article originally appeared. Write to him here.




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