13 things to know about Bob McCann recruiting his old Merrill Lynch team to UBS

Editor’s Note: Rule one in web journalism is to keep it as brief as possible. This posting grew throughout the day as more sources weighed in with their thoughts. Rule one got broken. But if you find this subject matter interesting, I encourage you to read to the end of this expanding list. You’ll find some strong opinions from some authoritative sources deep into the text.

Robert McCann, head of UBS wealth management division, has now surrounded himself with four former colleagues that helped him to lead at Merrill Lynch.

The key hires include: Robert Mulholland, who formerly headed of Merrill’s fee-based Private Client Group, Brian Hull, former head of Merrill’s Private Bank and Investment Group that serves ultra-high-net-worth clients. McCann also nabbed Merrill veteran John Brown, and Paula Polito, who directed marketing for his Global Wealth Management division at Merrill, according to the Wall Street Journal.

The question now becomes what effect this hiring spree will have on the fortunes of UBS, Merrill Lynch or both. To get answers I reached out to a number of my sources closest to Bob McCann and Merrill Lynch and here are some of the thoughts that they had to offer:

1.) The most significant piece of information to come out of the revelations about McCann and his hires is that he does not promise to present a plan until March 15, according to a former Merrill Lynch executive who asked to keep his comments anonymous out of respect for former colleagues.

“His number one strategy is to buy time right now,” he says. “He doesn’t want to be on the clock right now,” both because asset prices are still depressed and because brokers are finding the going extremely tough in bringing aboard new clients.

2.) But McCann’s decision to promise little is his signature style, according to David Hou, founding partner of Luminous Capital of Los Angeles.

“Bob McCann is one of the best leaders in the brokerage business,” he says on behalf of himself and Mark Sear, his partner. “He delivers on his promises and doesn’t overpromise. We respect him immensely and believe that he will eventually be successful at UBS — even though they have significant challenges ahead of themselves.”

As financial advisors at Merrill Lynch, Hou and Sear worked closely with McCann until they broke away to form their own RIA in May of 2008

3.) The difficulty for McCann in delivering on his promises is that he has two difficult paths to better profitability, says the former Merrill executive. He can either find a way to achieve a 50% jump in revenues or he needs to slash expenses, he adds. “This is more about him assembling his old team than him taking a mature look at what serious shape UBS is in.” The most effective hires right now would be executives that could get down to the “nitty gritty” of what to keep and what to cut, he adds.

4.) McCann has far-reaching management capabilities, Hou says. “In regard to Mulholland and other mid level managers, every leader has to have a great support staff,” he says. “We were not big fans of the mid level management — too much fat — at Merrill Lynch as we found them to be duplicative and simply [added to] overhead. However, Bob knows what he is doing and I am sure that he will take those that he feels will generate shareholder value.”

McCann had this to say to the Wall Street Journal about his hires: “This effects both the good people who are here who have deep institutional knowledge and adds some fresh talent and a new perspective.”

5.) McCann’s moves may not solve all of UBS’ problems but they may be just what the doctor ordered right now, according to Tim Welsh, principal with Nexus Strategy in Larkspur, Calif. “There was a real bloodletting going on both in terms of brokers and assets [walking out the door] and this will stop it,” he says.

What the move signals to UBS’ brokers is that executives in the corporate offices back in Switzerland have given McCann some autonomy. “It brings some confidence,” Welsh says. “It shows that he has the ability to make top-level decisions.”

6.) With enough autonomy, McCann can working some of his magic at UBS. “At Merrill Lynch, the brokers were king,” Welsh adds. “That’s what advisors love. That’s why they had a great run. They felt like they were on an even playing field with investment bankers.”

7.) What votes against the theory that McCann can bring a Merrill atmosphere to UBS is that 30% or 40% of its wealth management executives had Merrill pedigrees to begin with, the former Merrill executive says.

“To the degree that Merrill Lynch had a secret sauce, there were enough [former Merrill] executives in UBS’ top 50” that the company was already familiar with it, he says

8.) Yet there are things that McCann and his team can accomplish, Hou says. “I assume that some Merrill Lynch advisors will join UBS over the next few quarters. Bob has a devout following at Merrill and I am sure he will bring some advisors over.”

9.) McCann may not be as effective in attracting brokers as he was in bringing over his old Merrill Lynch lieutenants to UBS, says a recruiting veteran who works on behalf of RIAs and asset custodians and who asked that his comments not be attributed to him.

“Once a new sales leader is in place at a wirehouse, they seek to bring over their key lieutenants to help build strategy and execute,” he says. “Sallie Krawcheck at Merrill is doing the same thing I’m certain. What is different this time is the old Merrill Global Private Client Group was so stable. That was shattered with the Bank of America acquisition. But I don’t think we’re going to see a mass exodus out of BofA because of it.”

10.) Though McCann may not spark a “mass” exodus, he may attract a significant following from Merrill Lynch, Welsh says. “I wouldn’t be surprised to read that 10 top teams come over [from Merrill to UBS] a month from now,” he says.

11.) McCann’s latest move still leaves scads of questions unanswered, says Mindy Diamond, president of Diamond Consultants of Chester, N.J.

Will private equity be used to buy back the firm from the Swiss? Will UBS offer a retention deal to its top brokers? [Big advisors at UBS have been told by McCann that there won’t be one, she says.]

Will UBS try to go upmarket like Goldman Sachs and merely serve the super rich , and what happens to advisors who don’t fit that picture?

12.) The bottom line is that McCann and his Merrill hires are good people but the attitude of UBS advisors is wait-and-see while investigating other options.

“[UBS] is still radioactive,” Diamond says. She adds: “I’m not sure renewal is the right word. Reinvention is what’s needed.”

13.) McCann will be hard-pressed to reinvent UBS, according to Brian Hamburger, founder of MarketCounsel and The Hamburger Law Firm. “With so many in the industry surprised that UBS has not announced a departure from the US market, the last thing that most observers could foresee is McCann emerging with 'the best wealth-management business in the Americas,’” he says. “Just ask Merrill veterans what they should expect from a McCann tenure. They will tell you that, even with the resources of Mother Merrill, he was unable to achieve this lofty goal. I am unclear how bringing his colleagues from Merrill to the beleaguered UBS would yield a better result. Is this the last ditch effort to save US operations?”

Elizabeth MacBride contributed to this article.