Running With the Bulls

Merrill Lynch's E. Stanley O'Neal has taken a path less traveled to become one of the highest paid and most powerful blacks in corporate America

structure to tie it more closely to the multiple client segments we serve, and streamlined our district structure to achieve some efficiencies,” maintains O’Neal, who has been true to proper managerial form in communicating with staffers. “Where positions must be eliminated, people will be treated fairly-with a fair severance package and out-placement assistance.”

Amy Butte, a securities industry analyst at Bear Stearns in New York, says O’Neal’s ability to think proactively will benefit the expansion of the brokerage business. “He understands that in order to compete, management needs to be lean and mean.”

Relationships built on personalized, individual service-fueled by big signing bonuses and commissions for successful financial consultants-have long been the hallmark of Merrill Lynch’s brokerage division. But the strict adherence to that model, at the expense of technological innovation, has proven to be an anathema to the firm. By the time it finally embraced the Internet last year, Merrill was nearly two years behind the online trading boom, and such e-businesses as E*Trade and Ameritrade already had a lock on the market.

Merrill has since branched out online. Its Unlimited Advantage account-which charges a fee based on assets-rose in assets from $40 billion to $63 billion in the last three months of 1999. But the fact remains that the firm was among the last on The Street to get into the online services game. The “Why were you guys so late?” question still causes O’Neal to bristle.

“Look, I think we had-and have-an incredibly successful model for personal contact and personal service, advice, and guidance that depends on high-quality financial consultants,” he says with a perturbed look. “Making sure that what we did from a technology point of view was integrated into that model, as opposed to being stand-alone or disruptive, was very, very important. It took a lot of thought and energy to come up with the right formula to do that, and I think we did a spectacular job.”

O’Neal now faces the formidable task of making the online portions of the brokerage business work, without eating up its traditional revenue. He’s also focused on developing strategic partnerships, and appears unaffected by the wave of mergers and acquisitions sweeping Wall Street, including the $10 billion United Bank of Switzerland (UBS)/ PaineWebber unification.

“Major acquisitions have been helpful in accelerating our progress in a number of funds, such as international, asset management, and equities. What will be important to us going forward are partnerships that allow us, and other entities, to leverage each other’s market position and expertise,” he says, citing Merrill’s joint venture with HSBC Bank USA-a billion-dollar, global banking and brokerage service targeting affluent clients in Asia and Europe with net assets between $100,000 and $500,000.

Been There, Can Do That
Meeting challenges is nothing new to O’Neal. Ten months into his Wall Street career, the stock market crash of 1987 shook, rattled, and rolled the financial industry’s very foundation-and upped hi
s personal uneasiness quotient considerably. “I had only started to practice my craft with some skill at that point,” he says.

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