CIO Insight: Looking back at your Merrill experience, how did you formulate a strategy to overcome the significant challenges the company faced? McKinley: We had world-class competitors; the emergence of a variety of value propositionsall types of discounted online trading plansbeing offered to consumers, with technology playing a huge role, and time was not on our side. Exactly like the situation at AOL. We had to respond quickly, but as importantly, we had to respond well. The most essential thing for us was to get the business model right, then put the world-class technology under it to support it. At Merrill, that meant not doing what people expected. If you look back historically to 1999, there were an awful lot of people who said it was manifest destiny for the E*Trade or Schwab model to be the brokerage of the future, and Old Economy players just didnt get it. But you should never do strategy by consensus. As we saw itand this was a collective vision of the key business partners at Merrillin a bull market where all boats were rising with the tide, there was a lot of forgiveness in terms of the consumer not being given rich advice. People were obsessively focused on one thingto pay the least they could per trade. But when the market got dicey, we knew investors would need help in making decisions. The tagline was, "Never mistake intelligence for a bull market." And we knew we could offer the entire experiencesupport when you needed it and none when you didnt. It became apparent to us that it is a lot easier to provide great technologyas our competitors didthan to replicate a great consultative, advice-giving, advisory force, which Merrill had. It took Merrill years to build and it is a tremendous franchise. So our perspective, when we looked across our customer base, was not "Lets create a discount self-service online market like everyone else for a small group of customers." It was, "Lets give all our client segmentsultra-high net worth, high net worth, mass affluent, emerging wealtha great technology experience."
And thats what we did. As a customer, you have a choice: You can choose which portion of your financial management you need more help with and which you can handle alone. You can go online to trade, analyze your holdings, do portfolio analysis, migrate funds between accounts and offerings, pay bills, download research and access other advice. Or you can go offline and ask for specific advice on which transactions to do next. Even after Schwab topped us in market cap, we understood the event horizon that it was going to take to implement what we needed to do, and we were relentless about sticking to our commitment to our business model. But we didnt do what was expected.