Merrill Lynch Supernova
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About Merrill Lynch: The wealth management division of Bank of America is currently known as Merrill Lynch. It comprises of 15,000 financial advisors and $2.2 trillion in client assets; it is the world’s largest brokerage. Earlier the firm was publicly owned and traded on the New York Stock Exchange under the ticker symbol MER. In Brief: In this particular case study we find that Merrill Lynch has introduced a new client relationship technique called the Supernova at the Merrill Lynch’s Indianapolis offices. This practise was implemented on a trial basis and generated a positive and vibrant response between the financial advisors (FA’s) and their customers. But on the flipside it was continuously challenging the traditional ways of dealing of a relationship by a FA with its client party. The concerned person here in this case is in a dilemma whether to apply Supernova in Merrill Lynch with a larger perspective. Problems before Supernova:
* Large client base i.e. 550 clients per FA .Thus it was difficult to contact each and every client by an FA. * Secondly all the meetings and follow ups were not structured in a proper manner leading to shortage of time and non-delivery of information from one end to the other. Supernova: It was the name given to a new way to manage client relationships that originated in one of the Merrill Lynch’s Indianapolis offices. The idea was penned by Rob Knapp who is also referred to as the father of supernova. Origin of Supernova: Merrill Lynch’s FA’s often contacted their clients to provide them necessary information about the various investment products but in turn they irritated them and created customer dissatisfaction. From this viewpoint the idea of Supernova came into being. Mr Rob Knapp invented this methodology to create the ultimate client experience by proving the right solution at the right time with proper information about investment packages. Mr Rob Knapp came up with the 12-4-2 idea:
12 indicate monthly contacts -4 indicate 4 portfolio reviews and 2 indicate face to face meetings. The changes that were brought about by Supernova were:
* No. of clients to be 200 under each FA based on certain criteria’s. * Spread sheet model will be used in client selection model. * Client’s minimum asset worth would be 1 million at Merrill Lynch. Organisation:
* Supernova provides “administrative support” followed by “help getting organised.” * Client Associated helps Merrill Lynch provide administrative support by Daily folder system. The Supernova service promise using 12-4-2 Segmentation & Organization guaranteed the following things: * You will have a multi financial plan in place.
* You will be contacted by FA at-least 12 times every year. * Response within one hour and resolution within 24 hour.
* Every year FA’s to acquire some new high-quality clients * Least promising clients to be transferred to other FAs or Financial Advisory Centre. * After implementation FAs find 2 to 4 hours every day for client acquisition * Referral through existing prosperous clients
Process of Adopting Supernova:
The ultimate client satisfaction experience that Mr Knapp wanted to develop on a two-part pitch to sell Supernova to their clients. That could be done by (I) Ultimate client Experience. (II) Plan process discipline: where the FA’s go in a systematic and structured way, it saves their time and work avoiding chaos and any other problems. Support for FA’s adopting Supernova: The first step in the Supernova adoption technique was the FA buy –in. Here in this method the manager persuaded the FA’s to implement Supernova just by identifying with the positives of it or by making a compelling argument in favour of the program. The second step was the segmentation process which was followed by financial planning; 12-4-2 organisation and acquisition.
Challenges in Implementing Supernova:
The various factors that were responsible for making Merrill Lynch to face challenges are Economic backdrop ,politics and recognition ,follow up/support, client expectations ,changing Role in Fa’s, Misinterpretation
After going through the case which predominantly talks about Pareto’s 80-20 principle, which indicates that 80 % of profit comes from 20 % of customers. Customer satisfaction is the most important factor in any industry today .Customer has the final say in all your goods and services. The FA’s earlier were devoting too much time in handling every client at hand rather than focussing on the core group of clients which constitutes their business in a large way. Thus Supernova wanted to bring the change whereby the FA’s had plenty of time to talk and provide valuable meat in their conversations with their client’s vies-e-versa the clients also feels privileged to talk to their FA’s at the right time and at the right place. Although when Supernova came into being, it created some problems where FA’s assumed their roles to be changing in the organisation. But. Overall if we consider Supernova was successful in able to create ultimate satisfaction for their customers.