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Merrill Lynch: Supernova
Founded in 1907, Merrill Lynch grew rapidly under its founders' strategy to "Bring
Wall Street to Main Street." In the 1970s, the firm became a powerful force in investment
banking in addition to retail brokerage. By 2000, Merrill described itself as "the
preeminent financial management and advisory company-serving governments,
institutions, and investors throughout the world." In 2003, Merrill Lynch was one of
the leading financial-services firms in the world, and was the largest of the "broker
dealer" firms on Wall Street, employing more financial advisors (individuals who
managed relationships with retail clients) than any of its competitors
Jim Walker was a member of Merrill's Client Relationship Group, part of Merrill's
Private Client Group, which was responsible for financial-advisory services for
individuals (retail brokerage). The retail-brokerage environment had begun to change
in the 1970s with the partial deregulation of stock brokering. Under deregulation,
new firms entered the market with different service offerings. For example, Charles
Schwab offered discounted trading directed by the investor, in contrast to the traditional
brokerage model in which investors received advice from their stockbroker, and
or placed orders through him or her. L Mutual-fund distribution was also deregulated in the 1970s, enabling firms such as Fidelity Investments to compete with stock brokerages indirectly
by selling shares in their mutual funds to the public directly.
Retail brokerages such as Merrill Lynch delivered their services to individual clients
through stockbrokers, or "financial advisors" (FAs) as they were called at Merrill.
Typically, an FA would bring clients to the firm through his or her relationships, networking,
professional alliances, industry affiliations, and by "cold calling"2 individuals
thought to be good prospects.
Once an account was opened, the experience of an individual client varied considerably
depending on his or her financial advisor. Some FAs routinely contacted clients
to check on the client, offer advice on existing investments with the firm, and solicit
additional business. Others rarely contacted their clients except to offer them new
investment products the firm wanted to sell. For these FAs, contact with clients more
often occurred when the client called to initiate a trade, or report a problem. According
to a senior Merrill manager, "Unfortunately, a lot of our FAs fall into this category.
The problem is, we've always charged for good service, and everyone has wanted to
deliver it, but some of our people haven't followed through."
FA compensation, like that of most stockbrokers, was purely variable, based on the
quantity of business they brought to the firm. Compensation was a combination of:
1. A percentage of the revenue generated from commission for buying and selling
financial products in a client's account ("trades"). For example, if a client were
charged $120 to trade 1,000 shares of stock, the FA might keep 40 percent.
2. A percentage o f the revenue generated from "annuitized," or fee-based accounts
in which a client did not pay to trade securities, but was annually charged
a small percentage o f assets, varying with the size o f the account. For example, a
customer with $1 million with the firm might pay 1 percent o f assets.3 The FA
would keep a portion o f that 1 percent. Increasing the portion o f total assets in
annuitized accounts was considered a priority by most Wall Street brokerages.
Stockbrokers in general, and Merrill Lynch FAs in particular, were well paid. Industry
observers noted that Merrill FAs were particularly successful because the firm had
been adept at hiring strong performers and weeding out the less successful. Some also
believed that Merrill had done a better job than many o f its competitors o f ensuring
a level o f quality in the delivery o f its service. Established brokers typically earned
several hundred thousand dollars annually, with the most successful earning more than
a million dollars each year.
FAs enjoyed the autonomy their jobs provided. According to one: "What /bring in,
is mine. I work for Merrill Lynch, but I have my own clients. As long as I keep within
the letter o f the law I can serve them as I like and sell them any o f Merrill's products.
I ' m in competition with every other FA in this office. I f Merrill wants me to be a "we"
person, they can pay me a salary-they don't."
Good FAs, like all good stockbrokers, were in demand among the various retailbrokerage
firms, and could earn additional income by changing firms, when the
acquiring firm would pay a substantial bonus to the new broker based on his or her
"production" or historical revenue volume. The bonus was designed to compensate the
stockbroker for the portion o f clients who remained with the old firm rather than moving
with the broker. However, the bonus more than compensated for the loss. In fact,
many firms viewed the "signing bonus" as a way to acquire both brokers and clients.
Historically, the relationship between the stockbroker and the client was considered to
be stronger than the relationship between the client and the firm, or the firm and the
stockbroker. Some brokers changed firms frequently.
Stockbroker acquisition was the job o f the head o f a local office. These individuals
were often highly talented brokers who split their time between their own clients and
managing the other brokers in the office. Many found the acquisition o f new brokers a
thrill, not unlike the acquisition o f new clients.
FAs, like all stockbrokers, came from a variety o f backgrounds. They typically had
college educations, and all U.S. brokers were required to pass examinations such as
the National Association o f Securities Dealers' Series 7. All successful stockbrokers
were gifted salespeople. Many used sporting terms to describe the acquisition o f new
clients, an activity (when successful) they uniformly enjoyed.
The acquisition o f new clients resulted in what many brokers called their "book."
This was a broker's list o f clients having an account at the firm. Many firms, including
Merrill Lynch, had encouraged their brokers to increase the size o f their books,
paying them incentives to open new accounts. According to one Merrill FA, "In the
1990s, Merrill ran what it called 'The Masters' program-you got a trip to Hawaii if
you opened enough new accounts. Everyone was opening any account they could.
Service, customer retention, and profitability didn't matter-it was all about new
accounts." As a result, the size o f their book came to be important to many FAs.
Another noted: "I know I ' m going to be OK, even in a downturn, i f I've got a big
book. All those names really make you feel secure, and that's important in a business like this where you can only rely on yourself and you have to keep producing if you
want to eat."
Merrill Lynch's FAs were thought to be among the best on Wall Street. The firm
enjoyed a reputation for being an attractive place to work, based on (1) the support
provided for brokers in the form of a strong brand and good financial products, and
(2) the freedom brokers were given to effectively run their own businesses as long as
they generated enough business, used Merrill Lynch financial products, and met basic
ethical standards. An executive of another brokerage commented on Merrill Lynch and
its FAs: "They're the best-they do what we do, what everyone does, but they do it better.
How they 'out execute' us I'm not exactly sure, but they do it-again and again."
Supernova was the name given to a new way to manage client relationships that originated
in one of Merrill Lynch's Indianapolis offices (Exhibit 3 illustrates Merrill's
field organization structure). Unlike a strategic initiative from headquarters, it came up
through the ranks as a strategy for implementation, in response to conceptual strategy
set at the top.
The "father" of Supernova was Rob Knapp, who ran Merrill Lynch's Midwest
district. In 1995, Knapp had had a good year in revenue terms, but was concerned
about future revenues because his district ranked last in client satisfaction among the
32 districts in the country. Eighteen months later, following the implementation of a
Supernova predecessor, Knapp's office ranked fourth
Client Service before Supernova
Merrill's research led management to believe that three aspects of a relationship were
critical to client satisfaction:
1. The frequency and quality of contact
2. Rapid response to problems
3. Attention to details
An FA commented on the ability to deliver these prior to Supernova:
Most ofus didn't pay any attention to frequency of contact-if a client called, we spoke
to them. We didn't have time to make calls to clients because we were busy dealing with
clients calling us-wanting us to fix problems they were having, hold their hands when the markets declined, or do trades. Extra time was spent prospecting-and we had to do
a lot of that given the number of clients who quit.
It was hard to respond to problems quickly. We used to get overwhelmed-my
assistant was spending most of her time answering the phones-she didn't have time to
deal with problems, which meant I had to deal with them, except I was supposed to be
dealing with clients.
Attention to detail means things like being aware of life events for a client-an
impending birth, retirement, the desire to refinance a mortgage. These are really
important because they represent opportunities to meet a client's needs by selling them
something they need and want. But we didn't have time to listen for these kinds of
details-we were just trying to keep our heads above water.
According to Knapp: "The objective of Supernova is to create the 'ultimate' client
experience. We asked ourselves, 'What would the ultimate client experience look
like?' That was when we came up with 12-4-2."
12-4-2 was the Supernova description of what clients' minimum annual contact with
their financial advisor should be: 12 monthly contacts (to stay in touch and ask for
updates on financial goals or changes in needs), of which 4 were portfolio reviews,
and 2 were face-to-face meetings. Some clients needed more contact, but 12-4-2 was
12-4-2 was based on studies conducted within and outside of Merrill on client
desires. According to one FA, 12-4-2 enforced discipline: "I'm just not that
organized-I'm a people person. 12-4-2 forces me to make the contacts I know I
should make, but I've always found excuses not to."
12-4-2 was predicated upon the completion of a financial plan for the client at the
beginning of the relationship. Although Merrill had been encouraging all of its FAs to
develop financial plans for their clients, according to several FAs, "More often than
not, it wasn't happening."
While 12-4-2 was a breakthrough from the clients' perspective, it posed a dilemma
for the FAs who wanted to implement it: there were too few hours in the day to deliver
even a fraction of 12-4-2 because the average Merrill FA had 550 clients. As a result,
the way FAs planning to adopt 12-4-2 conducted their business had to change. The
changes ultimately becoming a part of Supernova, in addition to 12-4-2 and financial
planning, were described as segmentation, organization, and acquisition.
Knapp used an analogy to suits to discuss the principle of client segmentation:
Let's say you really like the process of buying suits. Over the years, you develop a really
big collection of suits. The problem is, you don't have the space to keep them all in good
condition. Your closet's only big enough for 20. So you clean out your closet, and you
send all but your 20 best suits to a relative. During the next year, you buy a few more
suits-good ones. Remember, you like buying suits. At the end of the year, you clean
out your closet again-and you force yourself to keep only the 20 best suits. Now, you
have 20 really beautiful suits. You're happy, the suits have enough space in the closet,
and you always look great.
It's no different with clients. The typical FA has 550. She can't give them all good
service-there's not enough room in the closet. Most of them aren't capable of being
very profitable-most aren't really good suits. Only by segmenting clients and only
keeping the best can an FA have time to give them the service they need-that will
make them loyal.
Knapp believed that the appropriate number of clients was 200 based on an analysis
he conducted, One Merrill office in
which every FA adopted Supernova set a goal per FA of 200 clients, each having at
least $1 million in annuitized assets at Merrill, or $10,000 in annual production (fees
The decision to keep or forgo a client was complex. Fortunately, an FA developed
a spreadsheet model to help other FAs in the process. Developing the model took
11 months, however, once the model was completed an FA could conduct the analysis
in approximately 30 minutes.
The FA who developed the model recognized that in order to deliver the high level
of service he wanted all of his clients to receive he would have to reduce their number.
He initially decided to keep only his top 100 clients. While that decision was easy,
determining which clients made up his top 100 proved difficult.
Initially, he ranked his clients by revenue generation. Then, he ranked them by assets.
He discovered that the two rankings were very different. Third, he ranked his clients
by those he and his assistant liked doing business with. Agc1in, the ranking was different
from the earlier two. In all, he produced 11 rankings based on different criteria for
keeping clients. He then decided to see which clients were on all 11 lists. Thirty-three
clients appeared on every list. Those 33 generated 89 percent of his income during
the previous year. In addition, his assistant noted that only 3 of the 53 clients she had
helped with problems over the past five weeks were among the 33. Ultimately, the FA
kept only those 33 clients, stating, "With those 33 I had 89 percent ofmy income and a lot fewer hassles-I've been able to spend my time giving them really great service
and acquiring more really good clients. My income-and my life-has never been
Most Supernova FAs decided to reduce their book to (1) 200 primary clients,
(2) important family or business associates of those clients (whom FAs kept to avoid
endangering the primary client relationship), and (3) those clients described as "necessary
to keep if you want to get into heaven." The ratio of primary clients to important
family or business associates was targeted at 3: 1.
Clients whom an FA decided not to keep were given to another FA or were sent
to the Financial Advisory Center, Merrill's centralized facility for smaller accounts,
if their assets with Merrill totaled less than $100,000 and were unlikely to increase
in the foreseeable future. The center served these accounts through a toll-free telephone
number and proactively called them at least four times a year to ensure that
their needs were being met. Many clients did not object to this new style of service;
the center's client-retention rate was actually higher than that of the average FA's. FAs
received payments from corporate for those clients sent to the center. Several FAs
noted that once transferred, their clients increased the business they did with Merrill,
and as a result, they earned considerably more on them than they had previously. FAs
noted, however, that rumors about corporate ending the payments were rampant. Clients
given to another FA were generally given away with no remuneration. According
to one FA, "This way you're totally focused on the clients you're keeping-there's no
looking over your shoulder."
Historically, each FA organized his or her practice in whatever way he or she thought
best. Supernova did not require an FA to adopt a particular organization scheme, but it
did provide tools that many Supernova FAs found useful. Merrill studies of FA desires
indicated that what they wanted most was "more administrative support," followed
closely by "help getting organized."
One of the biggest organizational problems FAs encountered involved using their
time effectively. Day-to-day, this meant delegating routine, administrative tasks
to their administrative assistants, called client associates. An FA using Supernova
In the past, clients wanted to speak with their FA whenever they had a problem or
needed something. I can't blame them, otherwise they rarely spoke to their FA. Under
Supernova, clients know they'll speak to their FA at least monthly, in fact, they know
exactly when the conversation is scheduled for. As a result, if they have a problem or
need a small, administrative change, the client associate can usually handle it.
Another FA added: "Clients used to feel it was OK to call and interrupt me whenever.
Now, I'm more of a professional to them. Think about it-would you call your
dentist and expect to speak with him immediately?"
In effect, under Supernova client associates "triaged" client telephone calls, only
involving the FA when necessary.4 Supernova client associates also prepared FAs'
daily "folders." Each folder contained a client's most recent financial plan, amendments
to it, and information on the client's family and business that the FA believed
was germane to the relationship. This included mortgage and tax rates, real estate,
insurance policies, hobbies, immediate family and important relatives/associates, and financial holdings not at Merrill. According to one Supernova FA: "I never want to be
speaking with a client and not have the information I need to do my job-which is to
take care of that client's total financial-service needs."
The folder supported the "folder system," which enforced discipline on the FA in
the following way: client associates set up telephone or in-person meetings between
the FA and clients, consistent with 12-4-2. These meetings were placed on the FA's
calendar, with FA's dedicating between six and eight hours each day to these meetings
(the time dedicated to meetings corresponded to the number of clients an FA could
have under Supernova). Each morning, the FA would be given the folders for clients
with whom he or she was meeting that day. These practices accomplished four things: First, they forced the FA to make good on 12-4-2 without increasing his or her
Second, they ensured that he or she would have the most up-to-date information
available for the meeting.
Third, they induced "folder guilt." If an FA didn't contact all the clients on the
list for that day, her client associate would have wasted time preparing the folders.
Because FAs tended to work closely with their client associates, folder guilt was often
strong enough to get the FA to meet her contact obligations, something numerous
"contact systems" had failed to do.
Finally, the folder system helped to ensure that the financial plan the client and
the FA agreed to was implemented, an occasional failure in the past according to
Client associates generally preferred to work under Supernova. According to one
The first three months on Supernova are hell for a client associate because the transition
isn't easy-they're doing both the traditional work and the Supernova work. But
once everyone settles into the Supernova routine, it's great. The client associate's day is
much more predictable-prepare folders for the next day, set up meetings, and deal with
a few problems. Because there are fewer clients-and happier clients-there are fewer
problems, and everyone is happier.
Some FAs experimented with offering bonuses to their client associates to help
them through the transition. At one office, client associates getting their FAs fully segmented
and organized under Supernova received $1,000 directly from the FAs.
The Supernova Service Promise
Commitment to developing a financial plan for every client and 12-4-2, coupled with
(1) segmentation and (2) organization, enabled Supernova FAs to make the following
service promise to their clients:
You are guaranteed three things.
1. You will have a multi-generation financial plan in place.
2. You will be contacted by your FA at least 12 times every year.
3. You will receive rapid response to any problem you may have, hearing from us
within 1 hour, and having resolution within 24.
The final part of Supernova was called "acquisition." As suggested by Knapp's suit
analogy, each year a Supernova FA would acquire some new, high-quality clients,
handing the least promising clients displaced by the new clients to another FA, or the
Financial Advisory Center.
The time dedicated to 12-4-2 left between two and four hours each day for client
acquisition, which the FAs found more than adequate. As one commented:
At first, I was skeptical that this would be enough time. What I've found is that it's more
than enough, for two reasons. First, since I segmented my book, gave up all but my top
200, and committed to 12-4-2, my client turnover has decreased dramatically. It used to
be that I had to do a lot of selling just to stay even. In fact, for every new client I got, I
usually lost a client-I had to run just to stay in place.
Second, I've found that the best way to get new clients is through my existing clients.
I've got a lot of clients who have been so impressed with the way I handle them, they've
recommended me to their friends and relatives. I'm pretty obvious about wanting referrals,
so they know I'm hungry for new business. But it doesn't seem to bother them, as
long as I'm delivering on the service promise.
Many FAs found that referrals were their best source of new business. A number
used their spare time to specialize in financial products of interest to their clients and
potential clients. In one case, an FA lived in an area where many people with company
retirement assets were about to retire. She developed expertise in individual retirement
accounts (IRAs), becoming a local expert. Another FA had a prominent anesthesiologist
as a client. In order to understand him better, he subscribed to anesthesiology journals
and attended professional association meetings. As a result, he received four referrals
that led to four new relationships, each of which brought in more than $1 million.
Supernova FAs found that their greatest problem was to force themselves to become
actively involved in client acquisition once the initial disruption caused by converting
to Supernova was over. According to one: "Under the Supernova way of doing things,
you aren't constantly putting out fires or worrying about the fact that you're losing so
many clients-because there aren't so many fires and your clients don't leave. To be
honest, you have to light a fire under yourself to get more business instead of just taking
it easy. I call this the 'golf problem'."
Some senior managers believed that the "golf problem" was serious because while
FAs adopting Supernova very effectively experienced an immediate increase in compensation,
the average new Supernova adopter saw an initial small reduction in pay. The
senior managers attributed this loss to local management's failure to coach the average
new adopters to begin their acquiring as early as possible in the transition process.
Transaction and Annuitized FAs
FAs adopting Supernova were both transactional FAs, who were paid by charging fees
per trade, and annuitized FAs. Some were a combination of the two. According to one
fully annuitized FA: "The soft underbelly of annuitized business is that unless you commit
to providing a certain level of service, once you're being paid whether or not you do
anything, there is less incentive to contact your client. Supernova solves that problem."
A transactional FA added: Once you call your client a few times having no intention
of selling anything, it's a lot easier to sell the next time you call. Supernova also helps
because it increases my knowledge of the client-when you know someone better, you
can figure out what their needs a r e - and sell them what they want."
THE PROCESS OF ADOPTING SUPERNOVA
Supernova had been spread though road-show presentations made by users who were
enthusiastic about what the program had done for them, their client associates, and their
clients. Knapp often used a two-part pitch to "sell" Supernova to potential adopters.
First, he described how good it felt to be delivering, "The Ultimate Client Experience."
Second, he described Supernova as "Plan, Process, and Discipline," noting, "You're going from chaos to plan, process, and discipline- that gives you control of your time.
Once you really move from chaos to control, you can't go back."
A Supernova office head noted:
All of my FAs use Supernova-they have no choice. When I'm hiring, I look for people
who are service-oriented, as opposed to transaction-oriented. Lots of people can sell a
mother diapers. But can you make her feel good about them when they're dirty?
I didn't force my experienced FAs to adopt the program. My immediate team adopted
it, and the others liked what they saw: the phone doesn't ring very often; we meet with
the people who pay us, and get rid of the rest; we do very little cold calling-we get new
clients almost exclusively through referrals. Every FA in the office chose to join.
Support for FAs Adopting Supernova
The first step in Supernova adoption was called, "FA buy-in." Road shows alone did
not ensure buy-in. Skeptical FAs, or those who did not attend road shows, could only
be persuaded by a manager sitting down with them and making a compelling argument
in favor of the program. Some managers asked the FA how much he or she would like
to be earning in a few years. Inevitably, given that FA's current business, there was no
way the number could be reached. Once the FA realized the implications of the current
situation, the manager could illustrate how the income goal could be reached by
The second step in Supernova adoption was segmentation. After that was accomplished,
financial planning, 12-4-2, organization, and acquisition were introduced.
However, segmentation was often the most difficult to implement. According to an
early Supernova adopter:
Initially, most FAs don't cut their books deep enough, maybe to 300. It's really hard to
cut-for years we've been told to get more names. After all, who knows if someone
will win the lottery-and some of those clients have been with you for years. The problem
is, you just can't give 12-4-2 service to 300 clients-you'll kill yourself trying. If
the leadership isn't on top ofit, these FAs usually fall off the wagon. A lot of the leadership
is made up of the best transactional people we have-it's hardest for them to adopt
a relationship perspective. Hunter-gatherers just don't turn into farmers overnight.
Adoption ranged from what one manager described as "They say their doing Supernova,
but they haven't even segmented their book" to "Supernova evangelists."
Merrill Lynch assigned one employee to devote herself exclusively to the program.
She spent her time organizing and participating in road-show presentations on Supernova
and developing new segmentation and organization software to support the program.
There's so much more I'd like to be doing. I need to be helping the FAs over hurdles.
With Supernova, FAs have to fundamentally change. In some locations, the office head
provides a lot of coaching and personal support. But in other offices, there's no one
there to help. After we conduct our two-day kickoff road-show meeting, we try to find
an FA in the office who's admired by his peers and is ahead of the pack on Supernova.
We make that person the local resource for the other FAs. But they don't get anything
for doing it, and they may or may not succeed at Supernova themselves.
There's a lot we could be doing, like how to run the segmentation software, and how
to set up a folder system. These things aren't brain surgery, but when you haven't done it
before it's tough. We review these at the road shows, but people tend to forget over time.
Most of it can be done over the phone-the average office only needs two hours a week
of in-person assistance during those critical three months after a group of FAs decide to
adopt Supernova. They usually need help segmenting, transitioning clients they are giving
up, getting organized, and changing their day-to-day behaviors.
KNOWN CHALLENGES TO IMPLEMENTATION
Jim Walker had to decide whether or not to recommend the national roll out of Supernova.
As part of his decision making, he reviewed data on Supernova results to date and projections
for the future (see Exhibit 5). In addition, he identified the challenges he would
encounter ifhe decided to go forward. Among Walker's concerns were the following:
In 2003, times were not good for retail brokerages; stock prices were down, and trading
volumes were depressed (see Exhibit 6). These conditions made people in the
industry tense and directed the attention of Merrill's top managers to immediate issues
such as meeting earnings projections. Conversely, some believed that a downturn was
the best time to drive change through a brokerage firm since firms tended to poach
each other's brokers less often while production was down.
Politics and Recognition
Supernova was seen as the child of its founders. Those in the firm who liked its founders
tended to like it. Those with mixed feelings about its founders tended to be less
positive. Professional jealousy may also have played a role in negative reactions. Recognition
of, and or rewards for Supernova's founders might exacerbate this situation.
Organizational Leverage Points
Achieving change in any Merrill Lynch office required buy-in from the head of that
office. That person could be thought of as an "organizational leverage point." However,
according to one FA, "A lot of office managers were trained that you manage by hoping
things will get better, and when they don't, by yelling at people, firing them, and hiring
new ones." A Supernova office head continued: "Remember that lots o f office heads are
both managers and FAs. As a result, they're competing with the people they're supposedto be managing--competing for space and resources in the office, and to ·a lesser degree,
for clients. Every time I walk into an FA's office I know he's asking, 'Is what my manager's
saying best for me--or for him?"
Heads of offices who had adopted Supernova and encouraged their FAs to do the
same believed that Merrill's FAs could be broken down into three groups. Twenty
percent would buy into Supernova quickly and adopt it with few problems. Another
20 percent were unlikely to ever buy into it. The remaining 60 percent would need 60
hours of coaching over two years. Coaching often involved asking questions such as:
1. What's your financial planning process?
2. What's your investment process?
3. What's your service delivery process?
4. What's your new business-your marketing-process?
To date, Supernova had been spread through road shows and other presentations. While
many FAs attended those road shows, only 2,000 had completely adopted Supernova.
Another 4,000 had partially adopted Supernova. These FAs posed several risks. First,
they jeopardized the Supernova "brand" in that their clients would not be as satisfied
as those of complete adopters. Second, Supernova advocates agreed that a failure to
fully adopt the program meant that its benefits for FAs, such as improved compensation
and quality of work life, would not be enjoyed.
Many Supernova FAs believed that after clients became accustomed to Supernova,
their expectations for service rose dramatically. In the words of one, "We designed
Supernova to spoil them-and it does." This situation created a problem in measuring
customer satisfaction when comparing non-Supernova clients with Supernova clients.
It also created a problem when service promises were made to clients by FAs who
intended to fully adopt Supernova, but never completely implemented the program.
Changing Role of Some FAs
Historically, the individual FA often made recommendations on what investments a
client should make. However, many FAs in general, and most Supernova FAs, saw their
role as asset gathering and allocation, leaving asset management to professional asset
advisors. Supernova FAs noted that they preferred this new role because it enabled
them to provide consultative service, examining risk relative to reward, as opposed
to selling a product. Many traditional FAs, who wanted to continue recommending
investments, associated the new approach (gathering and allocation) with Supernova.
Walker often received calls from FAs interested in Supernova in which they asked him for
the "Supernova software," believing that if they loaded it on their computers they would be
"Supernova compliant." Walker felt that these FAs saw Supernova as an exercise in implementing
technology. He noted, "We've got great new CRM software, the best out there. It
will make good Supernova FAs even better. But it's only one piece of a complex solution."
Both Supernova FAs and managers believed there was a problem with metrics, one
noting: "We don't get paid as well for a lot of the new things we're selling under Supernova,
like mortgages and insurance, despite their better profitability for the firm."
FAs valued their independence. According to a senior manager, "They don't want to
walk in lock step. They like autonomy. Anything that looks like a requirement from a
centralized authority is usually rejected out of hand, or at least fought vigorously."
Inclusion of Client Associates
Even though client associates were essential to Supernova's working effectively, most FAs
made the decision to adopt it, or not, without involving their administrative assistants.
A Supernova FA commented: "Historically, when we sold a product to a client, Merrill
Lynch made money and the FA made money. Supernova helps to solve the dilemma
that created. Supernova enables us to earn our money for handholding, and to do it
really well. It provides a business process-not a product. We've never had that before."