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Eva Castillo – Merrill Lynch Global Private Client

Stephen Harris

16 November 2006

In March of this year, Eva Castillo was named head of Merrill Lynch’s Global Private Client Group in the UK and Europe. She is based in London and reports to senior vice president Raymundo Yu, head of GPC EMEA Pacific. Prior to this role, Ms Castillo, a native of Madrid, served for seven years as the firm’s country head for Spain and Portugal. But Ms Castillo sees herself as a citizen of Europe, an attitude that shapes her hands-on management style. “To be effective, I must be visible in all the countries I manage,” she told WealthBriefing. According to the firm, Merrill Lynch’s Global Private Client Group is the largest and most productive wealth management business in the world with more than 15,700 financial advisors working out of nearly 700 offices in 37 countries and territories around the world. Those advisors have been entrusted with more than $1.5 trillion in client assets. GPC accounts for 40 per cent of the firm’s total revenue. For the first nine months of the year, GPC’s total net revenues increased 12 per cent to $8.8 billion, driving pre-tax earnings 26 per cent higher to $2.0 billion. Pre-tax profit was up 22.2 per cent, an increase of 2.4 points from last year’s record. In the EMEA region, GPC has 20 offices in 12 countries and focuses on high net worth clients with more than $1 million in investable assets. It increasingly targets ultra high net worth individuals with more than $30 million in investable assets. Ms Castillo’s direct management team includes Nick Tucker, market leader, GPC UK and Ireland; Gilles Dard, who manages GPC in Northern Europe and Jose Maria Ortega, who runs GPC in Southern Europe. In Europe, Merrill Lynch is conscious of the perception that it is a large, product-driven US broker. “This is a perception that we are trying to dispel. The reality is that Merrill Lynch has moved, along with most of the wealth management industry, to the advisory model with a long-term commitment to our clients,” said Ms Castillo. Merrill Lynch was founded in 1914 and soon gained fame for bringing “Wall Street to Main Street.” In 1952, the firm opened its first European office in Geneva and expanded to Paris, Rome, London, Frankfurt, Madrid, Amsterdam and Brussels within a decade. While Merrill Lynch’s US private client business is segmented by client assets, its international business model is focused solely on high net worth clients. “In GPC, our advisors are essential partners to their clients, helping them with all of the major financial decisions in their lives. Our ‘Total Merrill’ model looks at every aspect of a client's financial life and offers a range of solutions including investments, private banking, retirements, estate planning, lending and insurance,” said Ms Castillo. And she says GPC is also working more closely with the other half of Merrill Lynch’s business, Global Markets and Investment Banking (GMI). “Clients benefit even more when we act as one firm. They get the expertise of wealth management from GPC, and the products and resources of the institutional side from GMI,” said Ms. Castillo. “There’s a growing recognition that, on both sides, our competition has to remain external – not internal.” Ms Castillo has a unique perspective, having worked on both sides of the business. A former investment banker, she worked as chief operating officer for EMEA Equity Markets as well as head of GMI for Iberia. Traditionally, both sides of the business have been protective of their clients. She says that her goal is to build trust and relationships with her colleagues in GMI by putting the best GPC people forward to work closely with GMI on business projects. She says she is also seeing greater cooperation between teams within GPC. As clients become increasingly international, many being domiciled or having business interests in several countries, it is no longer unusual to have teams of financial advisors in different locations serving their needs. As wealth becomes more global, high net worth individuals are becoming more knowledgeable about both asset allocation and investments. Merrill’s approach to this evolution is through three business pillars; financial advisors, discretionary investment strategies through portfolio managers and wealth structuring. Open architecture, the offering of products to clients regardless of where they were manufactured, has also become a critical part of Merrill Lynch’s wealth management platform, and is further evidence of the move away from a product-push model. “Merrill’s offering is evolving. Research has shown the benefits of open architecture and clients are demanding it,” said Ms Castillo. “A major theme for high net worth clients is succession planning and servicing this need is an integral part of our strategy in terms of the development of our client offering. This work is currently done in the UK and Switzerland, since this is where the resources are located, although our aim is to offer this across Europe.” Ms Castillo says that training, often carried out at the team level, is seen as particularly important in GPC, and not just regarding products. What are often described as soft skills - like interpersonal relationships and communication – are viewed as essential to become an effective financial advisor. And talking about training gives Ms Castillo another reason to highlight that GPC is “solution driven” not “product driven.” “It is a creative environment in which clients are given customized service through the three pillars of our holistic offering, comprising our advisory, discretionary and wealth management teams. The glue that binds these pillars is the financial advisors and portfolio managers said Ms Castillo. It comes down to capabilities, being able to offer sound wealth management advice along with a wide range of product solutions, access to the resources of a global firm and backed by cutting-edge technology. That platform is resonating in the industry. Ms Castillo points out that a high profile team of financial advisors that recently joined from UBS did so only after they conducted considerable due diligence on Merrill Lynch, and its platform. “We can give them the capabilities that they need to grow,” said Ms Castillo. Merrill Lynch is obviously interested in recruiting more talented teams, but Ms Castillo is equally interested in retaining current financial advisors. Although retention can be the most difficult part of an executive’s role, she points to her own career as an example of how you don’t have to leave a firm to have a variety of experiences. So what are the lessons that Ms Castillo brings from investment banking? “It’s client focus without a doubt,” she said. “In investment banking you know your client very well. Investment banking is more transactional and relationships change more often, while in private banking, relationships tend to be more long term.” As for the wider strategic vision, Ms Castillo said: “Merrill has a great interest in Europe that flows from the very top of the organisation. The plan is to focus on organic growth and also to look at acquisitions and joint ventures in markets where Merrill already has a presence. But that is not to say that if a good opportunity arose that was outside these parameters we would not consider it.” “We see EMEA as a fragmented market and this in itself presents huge opportunities for us. The consolidation that everyone used to talk about hasn’t yet happened,” she said. “Of course local players have a local advantage and some have been investing in their wealth management offering for a number of years. Where our strength lies is that we bring a global offering to the local markets.” The strength of the global financial markets and growing worldwide wealth have been the main drivers of wealth management in recent years, but where would Merrill Lynch stand in a market downturn? “A downturn would also present an opportunity for wealth managers. There’s been a marked trend toward portfolios being much more balanced. The emphasis is far more on wealth preservation, although there are still some pockets of aspirational wealth,” said Ms Castillo. “During the summer when volatility increased many of our clients who had liquidity saw this as an opportunity to buy in a pull-back.”