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Building Trust Through A Consistent Client ExperienceRobert J. McCannVice Chairman, Wealth ManagementMerrill Lynch & Co., Inc.
Tower Group 200410th Annual Financial ServicesBusiness & Technology ConferenceMay 21, 2004Boston, MA
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Industry Returns to ProfitabilityNet Revenues (Index)
Composite
50
75
100
125
150
175
3/01 6/01 9/01 12/01 3/02 6/02 9/02 12/02 3/03 6/03 9/03 12/03 3/04
Inde
x (1
Q01
= 1
00)
Pre-Tax Earnings (Index)
Composite
50
75
100
125
150
175
3/01 6/01 9/01 12/01 3/02 6/02 9/02 12/02 3/03 6/03 9/03 12/03 3/04
Inde
x (1
Q01
= 1
00)
Source: Merrill Lynch Investor Relations: Composite includes BSC, C, GS, JPM, LEH, MER and MWD
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Trust Takes a Hit
Source: SIA 2003 Investor Survey
7%9% 8%
41%43%
0%
10%
20%
30%
40%
50%
1999 2000 2001 2002 2003
Investors citing dishonesty as main issue facing securities industry
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The ‘Tech Bubble’ Bursts
March 2000 Peak
October 2002 TroughSource: Merrill Lynch Economics
$8 trillion in value destruction
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High Profile Scandals
Accounting scandals
Celebrity prosecutions
Research independence
Mutual funds
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How to Restore Trust?
Market recovery
Honest accounting
Level playing field
Objective advice that’s suitable
Holistic approach to client needs
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The Client Relationship:What do they Want?
Keeps my best interests at heart
Returns my calls promptly
A strong performance track record
Keeps me regularly informed about
performance
Helps me develop overall investment strategy and asset
allocation
64%61% 56%
48% 45%
Source: SIA 2003 Investor Survey
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We Have the “Total” at Merrill Lynch
Retirement
Credit & Lending
Investments
Tracking Progress
Business Financial Services
Estate Planning Services
Beyond Banking
Advice & Planning
WE SEE YOUR FINANCIAL LIFE IN TOTALSM
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The Wealth Management Process
Set Strategy
Implement Solutions
ReviewProgress
Establish Objectives
Assessing Your Goals
Allocating Your Assets
Investment Proposal
Client Review Center
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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
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Analyzing the Analysts
The threshold question:
Does Merrill Lynch research add value?
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A Decade of Research Out-Performance
1993-2002Average 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%
S&P 500 2.26%
Source: Study by J. Randall WoolridgeThe Journal of Investing, Spring 2004
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A New Research Paradigm
Team culture vs. star culture
Absolute vs. relative ratings
More selective sector coverage
Cross-discipline, thematic reports
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A New Research Paradigm
Reports from Morningstar, BNY Jaywalk
“Buy, Hold, Sell” recommendations
Client access via website, toll-free numbers
Recommendations on statements, confirms
“Independent” research
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Building Trust Through A Consistent Client ExperienceRobert J. McCannVice Chairman, Wealth ManagementMerrill Lynch & Co., Inc.
Tower Group 200410th Annual Financial ServicesBusiness & Technology ConferenceMay 21, 2004Boston, MA