A Short History of The Merrill Lynch Principles

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As a mission statement of corporate values and standards, as well as a summary code of employee conduct, the Merrill Lynch Principles have often been cited as a model of brevity and clarity. To those looking for a career at Merrill Lynch, these Principles were known by heart and ready to be deployed at a moment's notice.

Through most of the firm's history as an independent brand (Merrill Lynch was acquired by Bank of America in 2008), the Principles offered a reliable window into its corporate culture for job seekers and potential clients.

Until the old Merrill Lynch culture was effectively dismantled in the wake of the 2008 financial crisis, these Principles were taken very seriously by the company and prominently displayed on the walls of all Merrill Lynch offices and in lucite blocks on many employee desks. These Principles were:

  • Client Focus
  • Respect for the Individual
  • Teamwork
  • Responsible Citizenship
  • Integrity

The official statement and exposition of the Principles evolved somewhat over time. The summaries appearing below are drawn from a 2002 release, back when Merrill Lynch was still an independent firm.

Client Focus

Clients are the driving force. Understand them. Anticipate and respond to their needs, but never compromise the integrity of Merrill Lynch. Provide the broadest range of high-quality, easy-to-use products and services. Develop and maintain long-term relationships. Listen to client feedback. Build trust and loyalty. Offer personal and individual service.

Respect for the Individual

Respect the dignity of each individual employee, shareholder, client, or member of the general public, regardless of level or circumstance. Be sensitive to workloads and support balance between work and personal life. Ensure equal access to opportunities. Foster trust and openness. Argue positions fairly and objectively. Value contrary opinions. Understand others. Listen to their concerns and viewpoints. Explain issues and answer questions. Resolve problems respectfully.

Teamwork

Integrate services seamlessly. Clients must see only one Merrill Lynch. Share information candidly and openly. Cooperate and collaborate within and across workgroups and teams. Value individual differences in style, perspective, and background. Share successes and failures. Be responsible for helping others. Be dependable, reliable, and contribute fully to the team. Recognize and reward individual and team accomplishments. Forge relationships with colleagues based on trust and respect, regardless of level.

Responsible Citizenship

Improve the quality of life in the communities where our employees live and work. Respect and adhere to all customs, norms, and laws where Merrill Lynch conducts business. Support and encourage community involvement. Contribute time, talent, and resources to make a difference in the lives of others.

Integrity

No one's personal bottom line is more important than the reputation of our company. Maintain the highest standards of personal and professional ethics. Be honest and open at all times. Stand up for your convictions and accept responsibility for your mistakes. Comply fully with the letter and spirit of the laws, rules, and practices that govern Merrill Lynch around the world. Be consistent between your words and actions.

Bank of America Takes Over

In 2010, Bank of America began supplanting the Merrill Lynch Core Principles with its own set of Core Values, which are:

  • Trusting and Teamwork
  • Inclusive Meritocracy
  • Winning
  • Leadership
  • Doing the Right Thing

Veteran Merrill Lynch employees objected strongly to this move. Among other things, they generally found the Bank of America Core Values to be less focused, clear, and direct. As a result, the Merrill Lynch Principles gained some new life and were, for a time, still displayed on the firm's website, though not very prominently.

History of The Merrill Lynch Principles

These Principles had their origins in the business philosophy of founder Charles E. Merrill as far back as 1914. Former SEC chairman Arthur Levitt once remarked that, of all the Wall Street firms, only Merrill Lynch had a soul. Moreover, Merrill Lynch was long known for an unusually nurturing attitude toward employees compared to other firms in its industry and was fondly called "Mother Merrill" by many. The Principles were defining characteristics of the "soul" that Levitt once identified, and Merrill Lynch has a long history as a training ground for financial industry talent, with its alumni regularly moving on to become key players in other leading firms.

Besides Charles E. Merrill, another key figure in the development and promulgation of the Principles was Winthrop H. Smith. He joined Merrill Lynch in 1916, two years after its founding, and rose to be its managing partner, responsible for many key initiatives that fostered its rise to prominence. To honor his contributions, upon his retirement in 1958, the firm (still organized as a partnership at that time) changed its full name from Merrill Lynch, Pierce, Fenner & Beane to Merrill Lynch, Pierce, Fenner & Smith.

Smith's son, Winthrop H. Smith, Jr., would also have a long career as a Merrill Lynch executive, and he felt a highly personal connection to the company's Principles. In his 2014 book, "Catching Lightning in a Bottle: How Merrill Lynch Revolutionized the Financial World," he described a late 2001 encounter during which he asked the (then) newly appointed CEO E. Stanley O'Neal about the latter's commitment to the Merrill Lynch Principles.

According to Win Smith, Jr., O'Neal had a dismissive attitude toward the Principles, though the firm would continue to use them for public relations purposes. More generally, O'Neal was openly hostile toward the old "Mother Merrill" culture, and derided it as being riddled with incompetence and nepotism.

Win Smith, Jr., quit the firm shortly thereafter and attributes its forced sale to Bank of America in 2008 as a result of O'Neal's abandonment of the Principles and his destruction of the firm's culture (after the company posted the largest quarterly loss in its history, $2.3B, O'Neal received a severance bonus of $161.5 million).

In the years following the acquisition by Bank of America, Win Smith, Jr., and former Chairman and CEO Daniel P. Tully attempted to assemble an investor group that would buy back Merrill Lynch and restore its independence—only to be rebuffed by the bank's CEO.