Merrill Lynch :

Supernova
Govind R Nambiar MBA152020
Vikas Singhal MBA152061

Introduction
It was founded in 1907.
By the 1970s it became a powerful investment banking
force along with being a retail brokerage.
Was the leading financial-services firm by 2003
It had more financial advisors than any of its
competitors
In 2002 it had a whopping 15,753 registered FAs.

Financial Advisors
An FA would bring clients to the firm through networking,
professional alliances, industry affiliations etc.
After opening accounts each FA would handle the clients differently.
Some contacted their clients regularlysome rarely ccontacted
their clients except to offer products
Sometimes contact would again occur only when clients called to
report a problem.
They were compensated based on the business they brought to the
firm
They received revenue from commission for buying and selling
financial products of the clients

Financial Brokers Continued..

Stockbrokers in general were well paid but Merrill Lynch
FAs in particular were very well paid.
They only kept the best and weeded out the rest
FAs came from various backgrounds
Acquisition of clients resulted in something known as
the book
It was the brokers list of clients having an account with
the firm
Firms paid bonuses to newly hired brokers
This is because they compensated for it later in sales
and garnering clients

Supernova
It was a new way to manage client relationships
It came up through the ranks as a strategy unlike a strategic
initiative from headquarters
It was introduced by Knapp in 1995
Knapp was successful in terms of revenue but not customer
satisfaction and was last in all of the 32 districts
18 months after implementing Supernova his district was 4 th in
terms of customer satisfaction
Prior to supernova, assistants were overhelmed while responding
customer calls and FAs were out prospecting
They did not pay close attention to details

 Q1. What does Supernova offer to Merrill Lynch? Does Merrill

Lynch need Supernova to be successful to grow in the future?
The supernova process offers Merrill Lynch a well designed
system to be implemented that provides the ultimate client
experience and helps reduce the burden off their financial
advisors. They could thus focus their attention on the
remaining clients and provide them service like they have
never experienced before with plenty of time remaining to go
acquire new clients as well.
This helped reduce market errors, client satisfaction
increased exponentially and so did FA satisfaction.

 Q2. What is Supernova and how is it different from

traditional financial advising models? What is the value
proposition for customers?
It focuses on customer satisfaction and filtering of clients
to lighten the load of the FAs.
Value proposition is a statement which explains why a
customer should buy a product or service. Here the value
proposition is that they will have the ultimate client
experience. They will receive the attention they require
and that too very quickly.

 Q4. Paint a picture of a Financial Advisors day using the

Supernova process. How is this different from typical
day under the old process?
A typical day in the old process would include the
broker attending to calls from his clients regarding
queries or wanting to invest and the day also included
the FA meeting with prospective clients or high profile
ones to offer them new products etc.

Critical Client Relationship

Aspects
Relationship Expected from Merrill Lynch Employees
1. The frequency and quality of contact
2. Rapid response to problems
3. Attention to details

Actual Relationship offered by Merrill Lynch Employees

1. Voluntarily FAs dont call clients frequently
2. It was hard to respond quickly
3. Do calls whenever clients quit
4. They do give attention to details like impending birth, retirement, the
desire to refinance a mortgage.

Supernova 12-4-2
12-4-2 was the supernova description of clients minimum annual
contact with financial advisor i.e.
12 monthly contact
4 portfolio reviews
2 face to face meetings
But there were average 550 clients per FA, so it was difficult to
handle all.
Merrill Lynch plans of segmentation, organization and acquisition

Clients Segmentation, Organization

& Acquisition

Ques : 3 What changes were required to implement the

Supernova processfor FAs? For Merrill Lynch itself?
Initially, 200 best clients out of 550 per FA were to be selected
But, Segmentation based on 11 different criteria like assets,
revenue and if the FA enjoys doing business with these clients
Only 33 were selected based on above criteria
Only selected ones would be given high level of services
These 33 were generating 89% of income
Clients whose assets less than $100,000 served by toll-free
centers
Every year least promising clients displaced by new ones in top
33

Outcomes of Segmentation,
Organization & Acquisition
What are the potential benefits of Supernova
implementation?
Toll-free center service ensured even high rate of customer retention
Clients also increased the level of business than before
Best clients were being totally focused by this scheme
More Professionalism in Merrill Lynch
FAs have proper meeting agenda date wise and updated information
following 12-4-2 scheme
Finally, fewer clients, happier clients, finest clients and fewer problems
FAs got new clients by the referrals from old clients

Selling Supernova : Roadshows

"Ultimate Client Experience
Plan, Process, Discipline
Control of Time
Service Oriented Employee

Ques 5 : How would you recommend Merrill Lynch

as a company to proceed in rolling out Supernova?
Road Shows
FA buy-in
Segmentation
Financial planning
12-4-2 scheme application
Organization
Acquisition
Develop Segmenting and Organizing softwares

Results & Projections

Results (75 Supernova Users)
Market Errors declined 54%
Increase revenue of 1%
Non-Supernova decreased 6%
Happier Clients
Projections
$130 Million annual increase in FA production
$6.6 Million annual reduction in errors
$58 Million increase in annual profit

What are the challenges and hurdles that must

be overcome for the success of supernova?
Economic Backdrop
Corporate Politics
Client Expectations
Changing Roles of Financial Advisors
How to overcome challenges
By recognition and rewards for supernovas founders
might exacerbate corporate politics

Supernova Success
2,000 Financial Advisors have completely adopted
Supernova
4,000 had partially adopted Supernova
Merrill Lynch has 15,000 FAs

Thank You