OR/MS Today - December 1997

December 1997

Investment in OR/MS Pays Off For Merrill Lynch

Private Client Group receives INFORMS Prize for effective use of operations research and management science

The Merrill Lynch Private Client Group was awarded the 1997 INFORMS Prize at the Fall INFORMS Meeting in Dallas.

Merrill Lynch Private Client was cited for "wide-ranging development and application of operations research and management science to its decision making. The pervasive incorporation of OR/MS all the way to the fundamental business strategies makes Merrill Lynch Private Group a role model exemplifying the value of OR/MS as an integral part of business practice."

The INFORMS Prize, first awarded in 1991 when it was known as the ORSA Prize, recognizes organizations that effectively integrate OR/MS into their decision-making at all levels of management, and use it in novel, varied and lasting ways. The Prize Committee, which makes on-site visits during a year-long selection process, looks for depth and breadth of all OR/MS applications as well as their qualitative and economic impact on a company.

Donald Robert Smith, chairman of the INFORMS Prize Committee, said the committee was "impressed that operations research and management science were used in practically every aspect of the business at Merrill Lynch Private Client. In particular, there is an expectation that OR/MS be used in evaluating strategic directions." Smith was joined on the committee by James Armstrong, Brenda Dietrich, Richard Ehrhardt, Stephen Graves and Peter Hammer.

John L. "Launny" Steffens, Vice Chairman of Merrill Lynch & Co., Inc. and Executive Vice President of Merrill Lynch Private Client Group, addressed the INFORMS audience via videotape. "After Merrill Lynch Private Client formalized financial planning as the basis of our business strategy, management science developed the asset allocation models which facilitated the implementation of that strategy to over 13,000 financial consultants," Steffens said. "This strategy has set Merrill Lynch apart in becoming the premier, planning-based financial management firm of choice."

Steffens added that management science is also helping the group "obtain significant insights" through analytical models used in investment strategies, client investment performance measurement, retention analysis, mutual funds optimization, credit evaluation, cross-selling and prospecting, incentive compensation and client satisfaction measurement.

"I have thrown many challenges to the (management science group) and they have repeatedly risen to the occasion," Steffens said. "They accept the 'hard' problems and pioneer new solutions."

Raj Nigam, chief scientist and director of the nine-member Private Client Management Science team, was on hand to accept the Prize. "Merrill Lynch is a unique place to work," he said. "The people are great, there is a significant amount of management by fact, and given the nature of the business we are in, there is a built-in appreciation for analytics."

Nigam extended thanks to several individuals including Newt Garber, his longtime mentor at Merrill Lynch who "showed us on a daily basis how to practice and implement operations research and management science."

Nigam thanked his team at Merrill Lynch Private Client which includes Stuart Altschuler, Jukti Kalita, Russ Labe, John Longo, Gretchen Marsh, Je Oh, Steven Sheerin, Steve Spence, and in memoriam Ray Beshinske.

Nigam also thanked his wife, Elaine, "who taught me, through her own practice, to look for the best in people, and to treat everyone, no matter what the circumstances, with dignity and respect."

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