Industry icon discusses a big Canadian mistake

Industry icon discusses a big Canadian mistake

Industry icon discusses a big Canadian mistake In an exclusive with WP, the former Chairman of Merrill Lynch International is reflecting on the 2001 sale of Midland Walwyn to CIBC arguing its negative impact continues to be felt by Canada’s Independents. 

WP met with Win Smith Friday to discuss Catching Lightning in a Bottle, a book he released in January 2014, the 100th anniversary of Merrill Lynch.

The former Merrill Lynch exec and current owner of Sugarbush Resort in Warren, Vermont, was in Toronto on business – he serves on the board of both AGF and Richardson GMP – providing WP with an opportunity to discuss his book.

Smith spent 28 years at Merrill Lynch leaving in January 2002 when CEO Stan O’Neal looked to move him from his job overseeing its international business to Vice Chairman, a role that had no one reporting to him and came with a generally vague job description.

The writing was on the wall - the good old days were done.

The decision by O’Neal in 2001 to sell Midland Walwyn to CIBC – O’Neal was president at the time and not CEO but still making most of the big calls – was one of the most short-sighted moves in Merrill Lynch’s long and illustrious history.

“That’s why I left. I knew he was going to change it,” says Smith. “O’Neal had no understanding of our international business. They were going to take a very short-term viewpoint. We were going into a year that was going to be challenging and you were going to have to make cuts and adjustments but if you’re going to be in something for the long term you didn’t make those fatal adjustments.”

“So, when they got rid of Midland Walwyn that was just ‘disgusting’ because we were still on track with our projections from the acquisition… It was really well positioned as a unique franchise in Canada, it was the only non-Canadian broker and had the third-most wealth management assets of any broker in Canada after only two years. The opportunity was unlimited.”

While it wasn’t nearly as financially devastating as the moves O’Neal would later make into collateralized debt obligations, it signaled a retreat from international private client business, an area of financial services that has since grown exponentially.

Today, Merrill Lynch has no private client business outside the U.S. and Canada has one less competitor to the big six banks, a reality that shouldn’t be lost on the advisor community.

Win Smith saw potential in Canada, and still does, yet Stan O’Neal saw fit to tear down the franchise. The day Merrill Lynch left the scene Canada’s full-service brokerage business lost some of its competitiveness. 

Robo-advisors can be thankful.