By ousting John Thain, Bank of America’s chief Ken Lewis could have done just enough to save his own head, but the move is likely to be the last straw for many senior advisors at Merrill Lynch who consultants say are looking for the door.

Mr Lewis was in a catch-22 last week: he needed to give shareholders a sacrificial lamb after the company he agreed to purchase at the end of last year for $50 billion announced a bigger than expected $15 billion fourth quarter loss.
 
“It came down to a situation of his head or mine,” said Alois Pirker, senior analyst of Boston based consultancy Alite Group, of the decision by Mr Lewis on Friday to give the former Merrill CEO and leader of BoA’s wealth management business his marching orders.

However, the departure of another former Merrill head was clearly the wrong message to be sending advisors in the brokerage Mr Lewis is desperately trying to retain.

“No doubt these departures are sending the wrong message,” says Mr Pirker.

Since the acquisition was formalised at the start of this month Mr Thain and Bob McCann, former head of Merrill Lynch's brokerage – two top ranking Merrill executives have been forced out of the business.

“What we are seeing is the bank thinking totally taking over what is left at Merrill,” said Howard Diamond, president of specialist recruiting firm Diamond Consultants.

“If there was ever any question whether the old Merrill Lynch was dead, now its not only dead, it’s buried and on the autopsy table,” he said.

Mr Diamond, who is in constant contact with Merrill representatives, said his phones have been ringing off the hook since the news of Mr Thain’s forced departure was announced last Thursday.

Mr Diamond estimated that one third of the 17,000 financial advisors who were part of the famous Merrill Lynch ‘thundering herd’ have “either left or are planning to leave” since the BoA purchase.

A report in Investment News on Friday said the retention packages promised to Merrill reps last year – in which producers of $1 million and more in yearly revenue to the firm would receive 75 per cent of their annual production upfront and an addition 25 per cent in deferred payments – has been honoured.

The consultants agree that Merrill advisors and management unhappy with the bank’s influence since the merger are likely to be ready to take their cue to leave the organisation.

“Merrill Lynch advisors are scurrying around like rats on a sinking ship,” Mr Diamond said.

Mr Alois added he wouldn’t be surprised if we are now about to see a wave of departures among Merrill management as well.

Mr Diamond said: “This is a clash of cultures that is being realised a little too late.”