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McKinley: We had world-class competitors; the emergence of a variety of value propositions—all types of discounted online trading plans—being offered to consumers, with technology playing a huge role, and time was not on our side. Exactly like the situation at AOL. We had to respond quickly, but as importantly, we had to respond well. The most essential thing for us was to get the business model right, then put the world-class technology under it to support it. At Merrill, that meant not doing what people expected. If you look back historically to 1999, there were an awful lot of people who said it was manifest destiny for the E*Trade or Schwab model to be the brokerage of the future, and Old Economy players just didn't get it. But you should never do strategy by consensus.

As we saw it—and this was a collective vision of the key business partners at Merrill—in a bull market where all boats were rising with the tide, there was a lot of forgiveness in terms of the consumer not being given rich advice. People were obsessively focused on one thing—to pay the least they could per trade. But when the market got dicey, we knew investors would need help in making decisions. The tagline was, "Never mistake intelligence for a bull market." And we knew we could offer the entire experience—support when you needed it and none when you didn't. It became apparent to us that it is a lot easier to provide great technology—as our competitors did—than to replicate a great consultative, advice-giving, advisory force, which Merrill had. It took Merrill years to build and it is a tremendous franchise. So our perspective, when we looked across our customer base, was not "Let's create a discount self-service online market like everyone else for a small group of customers." It was, "Let's give all our client segments—ultra-high net worth, high net worth, mass affluent, emerging wealth—a great technology experience."

And that's what we did. As a customer, you have a choice: You can choose which portion of your financial management you need more help with and which you can handle alone. You can go online to trade, analyze your holdings, do portfolio analysis, migrate funds between accounts and offerings, pay bills, download research and access other advice. Or you can go offline and ask for specific advice on which transactions to do next. Even after Schwab topped us in market cap, we understood the event horizon that it was going to take to implement what we needed to do, and we were relentless about sticking to our commitment to our business model. But we didn't do what was expected.

What was the customer response?

We had tremendous success penetrating our customer base with the online system. A majority of clients use the system for some purpose. Funny thing is, given the choice, those who opted specifically for the self-directed trading channel—the product that everybody said we had to have or we'd never survive—were very few.

Merrill was known for having many different technology silos that were hindering its ability to operate efficiently and be innovative. What did you do about that?

We had to migrate from a whole raft of bespoke systems to a fewer number of strategic platforms. That's a multiyear journey for an organization serving that many geographies and discrete lines of business. You're not going to flash-cut to a future state in one year. You have to have a vision of where you want to go and be committed to it. For me, that meant convincing people to integrate technology that could be used throughout the organization into their business plans. I had to preach consistency and also working with commercial partners. We made a lot of progress—for instance, the integration of global trading platforms and the partnership with Thomson Financial (to jointly develop Wealth Management Workstation for Merrill advisers and clients, which combines market data, news and portfolio management tools).