An Interview with Merrill Lynch's John Killeen

By Jessica Pallay
Wall Street & Technology
4 27, 2004

Merrill Lynch's John Killeen has been under close scrutiny in the wealth-management industry ever since the sudden exit of his predecessor, Byron Vielehr. As newly appointed chief technology officer of Merrill's global private client technology, Killeen is charged with overseeing one of the largest technology projects the financial-services industry has ever seen.
The 20-year Merrill Lynch veteran is in the process of overseeing the implementation of a $1 billion, five-year project to install broker workstations, using Thomson Financial as a general contractor to manage more than 400 vendors.
WS&T Senior Associate Editor Jessica Pallay recently caught up with Killeen to discuss how he is leading the technology project that everyone else in the industry is watching with bated breath.

WS&T: What is the present state of Merrill Lynch's deal with Thomson Financial? At what stage is the implementation?

Killeen: The good news is that we are making good progress against our plan. We've reached a critical milestone: We're currently in the user-acceptance phase. This past week we had representatives out on the West Coast giving demos to our financial advisers, and it was really well received. More importantly, the partnership with Thomson and the other vendors that are involved is very strong.

WS&T: What's the next project milestone?

Killeen: As we move through user-acceptance testing, we also continue to test for performance, stability and speed. Those are critical for our financial advisers as we put this on their desktops. As we move through those phases, assuming things go well, hopefully our next big [milestone] is when we actually start to roll this out.

WS&T: Any idea on the time line for that?

Killeen: We're making the right progress, but I'm reluctant to go into too much detail on exact dates. The fact that we have something that we can put in front of financial advisers, and [that] we're in our user-acceptance testing - it all bodes well.

WS&T: What elements of retooling wealth-management technology are cultural? How are your advisers responding to the new technology?

Killeen: We are devoting a great deal of time and resources to training and communications, and making sure that our financial advisers are aware of what is coming, and how the tools that we provide actually will facilitate their adoption of the wealth-management process, which is the larger business strategy on how we want our financial advisers to work with our clients.

WS&T: What are some of the new aspects of the product? Once it is rolled out, what will be unique about the advisers' desktops?

Killeen: The tool suite around wealth management is pretty well established across the industry, but what will make this unique is that we are facilitating the relationships for our financial advisers with their clients. What we hope to accomplish with the tool and the desktop is to give them the information in a more easily digestible fashion. We're calling it Client 360. It's a single-screen representation of the most important and most prevalent questions that a client may ask a financial adviser when they have them on the phone. It will talk to balances; it will talk to progress towards plans, and any important notices that affect that client. And within one or two clicks, we can drill down to greater and greater detail. It represents a huge productivity gain for our financial advisers. It has probably been the most well-received feature [during the user-acceptance phase].

WS&T: Tell me about the integration process. I understand your back office is proprietary - what are the challenges and benefits of integrating a proprietary back office with a vendor's front office?

Killeen: The application integration is an extremely critical part of the project. One thing that we've done that is really helping us is working with Microsoft. We've developed an integration framework that effectively isolates the front- and back-end applications. The integration framework enables us to leverage not just the front end of Thomson, but any of the other front-end applications, while we continue to maintain ownership of the middle tier and back end.

It also enables us to make changes to either side, front or back, without creating a lot of change issues for the other side. It really allows us to gate the pace of change and insulate the different components.

WS&T: Will other firms adopt similar forward-thinking technologies?

Killeen: I think integration and the ability to use best-in-class - whether it be proprietary or vended solutions - is really how people will distinguish themselves. The concept of an integration framework that facilitates that - and doesn't make it onerous to either remove or add something - is critical for anybody.

WS&T: Would your model be effective for other companies? Are there still situations where it is wise to build or keep technology projects in-house?

Killeen: I think every firm or group hopes to make their own individual decision. The driving factors around partnering or building yourself are where you can differentiate yourself. If you have a unique value proposition that is not available in the marketplace, it makes sense to do it yourself. If what you're doing is something readily available, you can partner with someone to provide that, and then layer on your expertise and the value-add.

WS&T: How do you establish who takes ownership of what processes? How is that responsibility divided, first between Merrill and Thomson, and second, within Merrill?

Killeen: Some of the aspects of ownership are dictated contractually, but it is also a natural outgrowth of good project management and strong partnerships.

WS&T: Have there been any management challenges you've come across thus far in the question of ownership?

Killeen: The project itself is a huge initiative with many partners and many moving parts. What we have been able to overcome is that, regardless of where an ownership line may have been drawn, we continue to adjust ownership and continue to stay focused on the end goal of delivery. To everybody's credit, people are committed to implementing the project, as opposed to who owns what during the development.

WS&T: What future trends do you see in the front office? Are there any pending components on the desktop that will revolutionize the wealth-management business?

Killeen: I think we'll continue to see an abundance of wealth-management tools introduced in the marketplace, but what's most important is that we remember the basic stuff - wealth management is still a relationship business and it should still be steered towards facilitating the adviser-and-client relationship.

The components of our wealth-management process - establishing objectives, setting a strategy, implementing solutions, reviewing progress - are still the critical components of wealth management. Our job is to put the toolset out there that facilitates that [process] best. I think the lynchpin around the tools will be client data - who has the greater understanding of the total client relationship, what is important to the client at the different phases of their financial life cycle, and how do we put all of that together so that our advisers are best positioned to work with their client?

WS&T: Many firms are just now investing in wealth-management technology. What advice could you offer a CIO who is ready to take this step?

Killeen: The most important thing at the outset is to realize that the job is bigger than you first realized. Effective scope management is critical. You need to very clearly understand the objectives, both from a business perspective and what your client is asking for, but you must also understand what your technology goals are as part of the project.

The most important thing for the person running the project to keep in mind is that you can't lose sight of what the end goal is. It is constant validation of progress that you're making towards that goal, and adjusting as necessary to keep things focused. The short line is: The leader of the project needs to be active and engaged and visible throughout the whole project.