Bank of America-Merrill Lynch (BAC) is reportedly selling its non-U.S. wealth-management units, Reuters said Tuesday, with the goal of raising $3 billion. The units are managing an estimated $90 billion in client assets, according to sources cited in the report, and they likely include several hundred advisors, experts state.
“We are committed to our clients and businesses globally but, in keeping with our policy, we do not comment on market rumors and speculation,” a BofA spokesperson told AdvisorOne in a statement.
Recruiters have mixed views on the news. Some believe it’s a good long-term move. But others insist that it creates more uncertainty and thus hurts Merrill in the short term as nervous advisors consider leaving the thundering herd.
"When a firm is seeking to boost it's Tier 1 Capital, a non-core business has to be either scaled up or shut down,” said executive-search consultant Mark Elzweig (left) in an interview.
The ever-increasing expense of maintaining the infrastructure for compliance and operations associated international accounts justify such a move, says the New York-based Elzweig. “It's not surprising that Bank of America chose to unload this business.”
The move to refocus on its core business should “makes Merill Lynch more of a crown jewel in the eyes of Bank of America than before," the consulant says. Still, he admits, the move “will undoubtedly fuel speculation that Bank of America will either spin off or sell Merrill Lynch, and that's a separate issue.”
Separate issue or not, the news is causing a stir amongst Merrill’s more than 17,000 advisors, according to Mindy Diamond, President and CEO of Diamond Consultants in Chester, N.J.
“We’ve gotten more than a dozen calls from Merrill folks who want to do more exploring of their options,” Diamond (right) said in an interview with AdvisorOne. “This is another catalyst for them … as the advisors are questioning the bank’s commitment to the international space.”
The move could diminish the Merrill Lynch name abroad, she adds, and raises questions about what platform the U.S. advisors will be over to use overseas for their international business.
“Bank of America will say that this about them trying to raise $3 billion in capital, but it does have ripples,” Diamond said.
“Merrill advisors feel that their revenues and operations are highly profitable and productive. Yet, they’re just a small piece [of Bank of America] and feel insignificant. For the global advisors, things could feel worse, like 100 times worse, and the news seems to confirm some advisors’ worse fears.”
Nonetheless, the recruiter says, the uptick in phone calls from worried advisors doesn’t mean that all of those calling will necessarily leave the thundering herd. “It just means there are lots of unanswered questions,” Diamond said. “Advisors can tolerate this, but as for all their clients, maybe not.”