Lessons Learned from the Rise and Fall of Merrill

Much has changed in the last 100 years in the financial services industry.

Looking back at the history, we’ve seen many recessions, periods of growth and everything in between - the Great Depression and the Financial Crisis of 2008 being the most memorable bookends. But how has this history changed Wall Street? And will it ever be the same again?

Humble Beginnings

Merrill Lynch is a great example of this. Started as a one-man shop back in 1914, Charlie Merrill was the beginning of Wall Street, quite literally. He built up his securities brokerage from himself to nothing short of an empire over the many years that followed.

Merrill almost didn’t survive the Great Depression, but through deleveraging his firm and his client’s portfolios, Charlie was able to make it through. The firm wasn’t so lucky in 2008 and with a leverage ratio of 36:1, it didn’t come as a surprise that they needed to be rescued by Bank of America.

Photo Credit: Walwyn via Compfight cc

Photo Credit: Walwyn via Compfight cc


What used to be a firm that prided itself for client and employee satisfaction, gave way to a culture that didn’t care about history or the integrity of the firm that once was, according to Win Smith Jr. who spent decades working at Merrill Lynch.

Rise and Fall of Merrill

Mr. Smith wrote, Catching Lightning in a Bottle, a book about the rise and fall of Merrill Lynch over its 100 year history. Merrill counted Smith’s father, Win Smith Sr., as a founding partner, but Mr. Smith himself, could only put up with so much and left in 2001 after decades of work with the firm, disturbed by the culture change he saw coming around the corner.

The new team that came in 2002, proved his suspicions right and the firm wasn’t able to survive 2008 on its own. When asked if we learned anything from the period, Mr. Smith states, “I hope so.” He goes on to share that the only way he believes Wall Street will be successful again is to earn the trust back of Main Street, like Merrill was able to do in the 40’s and 50’s following the Great Depression.

What You Should Take Away

Mergers like the one between Merrill Lynch and Bank of America became all too common over the last few years. From wirehouses to mutual fund companies and more, change has been the name of the game on Wall Street.


Do you know how these changes have affected you personally? What they’ve meant for your portfolio (investments, fees, etc)? If not, you need to find out.

GuardVest has a simple and quick solution to help you to measure everything from how your fees match up, to your risk profile and performance with as little as a few mouse clicks. Give it a shot today, after all, knowledge is power!

Do you recognize all of your funds/investments? Are they performing well against their peers?