Early on in college, I designated the summer of 1997 as the time to get an internship in finance. Other summers I spent working at the beach or goofing off in my home town. Headed into my senior year, it was time to get serious and start building my career. Merrill Lynch offered me an unpaid internship at a regional office and I took it, eager to learn about the career path of a stock broker. But since it was unpaid, I needed another job to fund my summer activities.
I landed a second job at a used record store (keep reading to see what music I was listen to that summer). There I learned about buying and selling inventory, managing a retail store and a lot about music. It turned out to be a much more fulfilling experience than anything I did at Merrill… and I was paid. But I learned some valuable lessons at my Merrill Lynch internship that helped shape my career.
No Other Options
To save on living costs, I searched for an internship near my parents so I could live with them. Rent was free, but the location limited the number of options for a decent internship. I sent out close to 20 letters (yes, letters not emails) to various financial companies in the area and heard back from only two. The first was a small local financial adviser’s office. They brought me in for a hot-box style interview and peppered me as if it was McKinsey. I was not selected for a position, and I was OK with that. The second company that contacted me was the downtown Merrill Lynch office. I was offered a summer internship, no questions asked. The only stipulation was it was unpaid. On the plus side, it was only three days a week for four hours a day. Being my only option, I took it.
My sister had worked at a used record store near my parent’s house. She recommended me to the manager. After an informal interview, my two summer jobs were secured.
The Merrill Lynch Internship
The first day of the Merrill Lynch internship started with a morning breakfast meet-and-greet where the office manager spoke to the 20 or so interns about how Merrill Lynch is a great place and how important the gold plated mission and ethics statements were. It was the last time anyone ever spoke of those ethics statements all summer.
I remember the office manager saying “When you see me, please say hello. I love my job here at Merrill Lynch, and when people ask me how I am, I always say I’m FANTASTIC!” He was that kind of guy. I tested him in an elevator a month later and his response to my hello was fantastically true.
Each intern was paired with a mentor/stock broker who called themselves financial consultants. Mine was in his late 20’s and seemed to have no experience in finance prior to starting this job. He recently completed a general business degree from a local school and was encouraged to try out Merrill Lynch by someone who had an in there. He married at a young age, had a child, and frequently advised me to not do the same in my twenties.
He read a lot of motivational books and had inspirational photographs hanging in his cubicle accompanied by written notes to himself that said “FOCUS”. He once asked me where he could find naked celebrities on the internet. I questioned how he could find decent investments if he struggled to find naked celebrities on the internet. We had a good rapport.
Being a Merrill Lynch financial consultant was all about building a business. Each consultant was on their own, backed by the name of Merrill Lynch, a few corporate resources and some cold call lists. The focus early on in a career was on finding clients. If you couldn’t acquire clients, you’d be out the door in 6-12 months. For enterprising young go-getters wanting to build a solid career and potentially large income for themselves, this was a place it could be done.
My mentor genuinely wanted me to have a great intern experience. He wanted to take me under his wing, show me the ropes in the industry, and inspire me to become a stock broker too. The problem was he was still in the client acquisition phase of his career. His small-time clients were mostly family, friends, and the 1 out of 100 people who became clients after he cold called them. Cold calling was a large component of becoming a successful financial consultant at the time, and learning that was a big turnoff for me. A few years later I had a temp job cold calling and it was the worst job I ever had.
Today with the National Do Not Call Registry, the cold calling pool of numbers must certainly be smaller. This increases the importance of the existing business relationship clause in the Do Not Call Implementation Act of 2003. Due to the fallout of the financial crisis of 2008-2009, Bank of America now owns Merrill Lynch and presumably the banking customers can be marketed to by Merrill Lynch financial consultants. Perhaps this is why Bank of America has been reluctant to spin off Merrill Lynch.
The first few weeks of my Merrill Lynch internship consisted of organizing my mentor’s files, making copies, maintain his customer lead list, and doing minimal stock research (as part of the intern program). But I mostly made copies. My mentor knew this was crappy work to give me, but he really needed the help because he was so busy and paper binders were the medium back then.
Frequently he would ask me what I wanted to do during my time as an intern. I repeatedly said I wanted to see him go into the system and buy some stock. Simple, right? Well, he didn’t have a lot of clients and didn’t go into the trading system very frequently. But toward the end of the summer, he finally had an opportunity to make a trade and I sat down to watch him do it.
He was a nervous mess. Any mistake would be a personal cost to him so he navigated the black screens with extreme caution and a sweaty brow. Completing the transaction was anti-climactic. Obviously today we execute stock transactions on a computer all the time, but this was before online brokers were commonplace and to see this in action was probably the highlight of my internship.
The Record Store
Summer mornings at the downtown Merrill office were juxtaposed by afternoons and evenings in the record store. I traded dress pants and a tie for jeans and a name tag. I loved working in the record store. It was a unique retail experience because I sold and purchased inventory.
Customers would bring in their used CDs, or CDs they acquired as free demos from the labels, and sell them to us. We paid $0.50 to $5.00 per CD, depending on how quickly each CD sold the last time we had it in the store. CDs sold for $2.99 to $7.99. If we knew a CD would sell within a week, we’d pay $5.00 and sell at $7.99. For a longer selling period we’d pay less and sell at $5.99 or $7.99. The computer software would help determine what to buy and sell, a nifty system that came with the price of the franchise.
If we had too many copies of a CD or it was damaged in any way, we’d reject it. We had a waiting list for certain CDs (The Beatles and older Metallica albums were very popular), and those would sell immediately upon calling the customer who reserved it. It was a good business model and the owners were making a daily profit. I enjoyed watching this buy and sell process work, and had a cool manager to show me how the overall business ran. He was a great operator and treated the customers like royalty. I only saw the owners when they came by to collect money or look at a report. Steve Case would have been proud.
Best of all, I had a nice discount and could price the CDs I wanted at a low price and buy it at a discount. I bought about 80 CDs that summer and discovered some great music like If You’re Feeling Sinister (from the $2.99 bin), Days for Days by The Loud Family (led by the late, great, Scott Miller), Brendan Benson’s One Mississippi, Mary Queen of Scots by Eugenius, Is it … Man or Astroman?, and Johnny Guitar by The Blue Eskimos (click albums to sample a few tracks on Amazon).
Back in the Office
One day I asked my Merrill mentor how fees were charged to their clients. He replied, “They never see ’em”. “What do you mean?”, I said, “Where does the money get taken out?” He said fees are taken out, but they don’t show up in their statements. That way, they can see the progress their investments make, but have no idea what they are getting charged. That didn’t make sense to me. As a client I’d want to know what was being charged.
Many of us scoff at trading fee based financial advisers and don’t want or think we need their advice or return-eroding fees. But others probably wouldn’t be investing if they didn’t have an adviser because they are intimidated by the markets, or are too busy with their lives to spend time on investments. Is a person better off investing through a financial consultant instead of not investing at all? As long as returns well outpace fees, yes. But an adviser is not for me.
So What Did I Learn at My Merrill Lynch Internship?
I learned that I did not want to become a stock broker. This was a profound realization because I thought the internship was going to be the first step in that direction. I also learned that stock brokers don’t need a degree in finance to be successful. They do need a strong work ethic and the ability to pass some securities exams. Among many other lessons, my mentor taught me that fees were purposely hidden.
This was not the right industry for me and instead I found a career in information technology. Maybe I could have been successful at managing money for my family and friends, and I’d be able to find bigger clients. Or maybe I would have failed because of my reluctance to cold call. Maybe I was afraid to fail. Being a young broker was no easy gig.
1997 was a great year to be a stock broker. Stock investments made lots of money, and the internet stock bubble was hitting its stride, despite some emerging market turmoil. I imagine once the year 2000 arrived, many stock brokers’ careers came to an end. There was not enough money and clients to go around as start-up companies vanished and individuals moved money into real estate for the first half of the next decade, creating the next bubble.
Through a quick google search of my old mentor I learned he is still a financial consultant but at a different firm. I also learned he had two more kids and reached a lot of his personal goals. It’s unlikely I’ll ever have my money managed by an adviser, let alone entrusting it to an inexperienced broker like my mentor was. That said, he was honest and dedicated to helping his clients, whether or not he knew what was best for them back then. Over the years, I’m sure his experience has made him a better adviser. He was not afraid to work hard, and his determination to succeed at that job was undeniable. He had a family to provide for, a dream house to buy, and a retirement of his own to achieve.
I worked at the record store again over Christmas break that year. It survived a few more years. The owners invested $15,000 in a shoddy website to sell their inventory online that came nowhere close to what CDNow and Amazon were doing with music. Then Napster ignited the demise of the friendly neighborhood record store. The store owners wisely exited the business and sold their remaining inventory at their newly opened used computer store.
I spent a lot of time in my youth flipping through racks of CDs, looking for that great new band for $2.99. But it doesn’t work that way anymore as I sit here listening to my satellite radio, with my iTunes library, Pandora, Spotify, and Apple Radio all on standby if needed. The record store manager moved a few doors down to manage the Starbucks where I’m confident he’s moved up the ladder from there.
To this day my Merrill Lynch internship remains on my resume. I traded about 120 hours for the right to put those few lines on it. Had I been paid $10 an hour I would only have made $1200 for the summer. My volunteered time there was ultimately a fair trade in exchange for the internship experience that helped me attain my first job in the real world.
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