Client relationships are key to surviving the present environment for financial Firms, says David Komansky, CEO of Merrill Lynch & Co. Market turmoil has forced the financial services industry to focus on key priorities, “on what we can control, and find ways to differentiate ourselves”. Komansky made the remarks today at his firm’s Banking and Financial Services Investor Conference.

“ThereÕs a lot of noise out there – convergence, consolidation, scale. You know the issues. You know they all spell intense competition. Only a few firms will prevail.” He said that Merrill believes those that will survive will meet four key requirements: deep and meaningful client relationships, a global presence, best-in-class products and services, and disciplined execution.

“As the recent environment revealed, relationships really do matter. Transaction-only business models have not prevailed. ThatÕs why weÕre segmenting our private client service offering. Our goal is to enhance the quality of the client experience for all clients,” he said.

He noted that a superior manufacturing capability enables firms to control the quality of the solutions they offer, and tailor them to clientsÕ needs. “Also enabling us to deepen client relationships: our commitment to open architecture. Whether with our own products – or those we source from others – our goal is to enhance the client experience with superior offerings in all of our businesses.”

Even the giant Merrill is admitting it can’t be all things to all people. “We continuously scrutinize each of our businesses to focus on the core strategic competencies that will propel growth: identifying places to
leverage distribution, improve service, enhance value to clients and increase profitability. Our philosophy is simple: We will not starve opportunities to feed less-attractive businesses.”

Komansky said that he and Stan OÕNeal, Merrill’s new president and chief operating officer, are focused on a number of strategic priorities for 2001: to continue building market share in equity origination and M&A; implement a global, multi-channel service model for private clients; improve the quality of earnings by growing recurring revenues; build the Securities Services business, and continue to develop a banking strategy to better support the needs of corporate and private clients.

He said that the multi-channel retail model is being embraced by clients and advisors, ad that the firm is “significantly ahead of schedule” toward its target of enrolling 500,000 accounts in its call centres for accounts of less than $100,000, by year-end. “Although current investor activity is slow, we expect segmentation will help us improve pretax margins and grow revenues and earnings at an accelerated pace in the future. Komansky also noted that Merrill is not in an “acquisitive mood” right now, and that it also isn’t interested in being bought either.