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Technology > Investment Platforms > Turnkey Asset Management

Wealth Operations on a Roll

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Bank of America reported net income of $2.6 billion, or $0.20 per share, for the first quarter of 2013, compared with $653 million, or $0.03 per diluted share, in the first quarter of 2012. Revenue, net of interest expense, rose 5% to $23.7 billion from $22.5 billion a year ago. Analysts, however, had expected earnings of $0.23 per share.

The firm’s number of financial advisors was 16,084 versus 16,692 a year ago and 16,411 in the prior quarter. There were 17,312 wealth advisors, down from 18,004 a year ago and 17,640 in the final quarter of 2012. The full tally of client-facing professionals was 20,037 versus 20,982 in the year-ago period and 20,386 in the previous quarter.

Yearly advisor productivity, as measured by fees and commissions, stood at $971,000 vs. $891,000 a year ago and $927,000 in the prior quarter. (These figures do not include the results of advisors in consumer and business-banking operations.)

Global Wealth and Investment Management net income rose 31% from the first quarter of 2012 and 25% from the prior period to $720 million. “Revenue increased 7% from the year-ago quarter to $4.4 billion, driven by higher asset-management fees related to higher market levels and long-term AUM flows, higher transactional revenue and higher net interest income,” the company said in a statement. “The pretax margin was a record 26% for the first quarter of 2013, up from 21% in the year-ago quarter.”

Total assets under management were $2.25 trillion, with about $1.83 billion held in Merrill Lynch client accounts. Flows of assets under management in the quarter were $18 billion versus $11.7 billion in the prior quarter and $7.8 billion a year ago.

Morgan Stanley

Morgan Stanley said it had net sales of $8.2 billion for the first quarter compared with revenues of $6.9 billion a year ago. For the current quarter, income from continuing operations applicable to Morgan Stanley was $1.0 billion, or $0.50 per share, compared with a loss of $79 million, or a loss of $0.05 per share, for the year-ago period.

Excluding a debt-value adjustment of $317 million, net revenues for the current quarter were $8.5 billion, compared with $8.9 billion a year ago and income from continuing operations applicable to Morgan Stanley was $1.2 billion, or $0.61 per share, compared with income of $1.4 billion, or $0.71 per share a year ago. Analysts had expected the company to report earnings excluding items like DVA of $0.57 a share on $8.35 billion in revenue, according Reuters.

Morgan Stanley’s Global Wealth Management Group reported pretax income from continuing operations of $597 million compared with $562 million in the prior quarter and $403 million in the first quarter of last year. The quarter’s pretax margin was 17% versus 17% in the prior quarter and 12% a year ago.

Net revenues for the current quarter were $3.47 billion, compared with $3.32 billion in the prior quarter and $3.29 billion a year ago. Income after the non-controlling interest allocation to Citigroup and before taxes was $476 million. Net income for the first quarter of 2013 was $255 million, down 4% from $267 million in the prior quarter, but up 29% from the year-ago quarter.

In terms of the unit’s advisor headcount, Morgan Stanley had 16,284 reps as of March 30 versus 16,352 as of Dec. 31, 2012, and 16,726 as of March 30, 2012—a 3% year-over-year decline (or a loss of 442 advisors). As its headcount fell slightly, its annualized average fees and commissions per advisor rose to $851,000—a 5% jump from the earlier quarter and a 9% jump from last year.

The average level of client assets per rep was $110 million, up from $104 million three months ago and $100 million a year before. Total client assets were $1.8 trillion at quarter end.

Fee-based assets continue to rise. They now stand at 35% of total assets versus 33% in Q4’12 and 31% in Q1’12. Meanwhile, fee-based asset flows were $15.3 billion in the most recent quarter, up from $6.9 billion in the prior quarter and $10.2 billion a year before.

Wells Fargo

Wells Fargo’s nearly 30% of the mortgage market helped the bank maintain its 13th consecutive quarter of profitability. Revenue at Wells was down 1.7% in the first quarter, though, to $21.26 billion after the bank took a 2.6% hit to its mortgage business, and low interest rates hurt profitability despite an 8% rise in deposits.

 “Wells Fargo delivered outstanding first-quarter 2013 results for our shareholders,” said Chairman and CEO John Stumpf in a statement. “Quarterly earnings and EPS increased at double-digit rates compared with first-quarter 2012, while loans and deposits demonstrated continued growth in a challenging economic environment.”

Wells’ Wealth, Brokerage and Retirement unit reported net income of $337 million, up 14% from a year ago but down 3% from Q412. Client assets for the retail brokerage were $1.3 trillion, up 5% quarter on quarter and up 7% year on year.

The number of financial advisors in the retail brokerage was 15,354, down slightly from 15,414 in December and up 1% from a year ago. The total number of registered reps was 18,558 as of March 30 versus 18,662 as of late 2012.


UBS said its first-quarter net profit was 988 million Swiss francs ($1.06 billion), or 0.26 Swiss francs ($0.28) per share, down slightly from 1.035 billion Swiss francs ($1.11 billion) a year ago, or 0.27 Swiss francs ($0.29) per share—beating analysts’ estimates.

The Americas wealth unit, led by Bob McCann, had profits before tax of $251.5 million compared with a profit before tax of $216 million in the prior quarter and about $215 million a year ago. Operating income was largely unchanged year over year at $1.7 billion, an 11% improvement from the earlier quarter.

The Americas operations reported adjusted quarterly profits before taxes of $262 million in the first quarter of 2013 compared with an adjusted profit before tax of $219 million in the prior quarter.

Net new money for the first quarter of 2013 was $9.2 billion versus $4.6 billion a year ago and $8.8 billion in the prior quarter. The company says this increase can be attributed to both newly recruited advisors and interaction with its Global Family Office operations. Including dividends and interest, net new money was $14 billion in Q1’13 versus $9.3 billion a year earlier and $16.7 billion in Q4’12.

The number of UBS financial advisors in the Americas stands at 7,065, up six from the prior quarter and 50 from a year ago. Client assets under management total $936 billion versus $885 as of Dec. 31, 2012, and $851 billion as of March 31, 2012.

The average level of assets per advisor is $126 million, an increase of 5% from $119 million in 4Q’12 and a jump of 10% from $115 million in 1Q’12. Yearly fees and commissions per rep were $984,000 as of March 31, down 2% from $1.001 million in the prior quarter but up 10% from $897,000 a year ago.

LPL Financial

LPL Financial said it had net revenue of $974.8 million for the first quarter of 2013, up 8% from a year ago. Net income was $54.7 million, or $0.51 a share, versus $41.2 million, or $0.37 a share—an EPS increase of 38%.

On an adjusted basis, net income was $68.1 million, or $0.64 a share, versus $63.2 million, or $0.56 a share, an EPS jump of 14%. Analysts polled by Thomson Reuters had anticipated adjusted earnings of $0.55 per share on revenues of $978.92 million.

The total number of advisors affiliated with LPL rose by about 3% year over year from 12,962 to 13,377. It also added 25 reps since Jan. 1. The independent broker-dealer’s level of total advisory and brokerage assets jumped 11% to $394 billion, while the level of assets on its fee-based platforms grew close to 18% to $130.2 billion.

Net new advisory assets, excluding market movement, were $3 billion for the first quarter, driven by “strong advisor productivity and the growth in independent RIA assets,” according to the company. Assets under custody on LPL’s independent RIA platform grew 72.3% to $46.7 billion as of March 31. These operations now include 199 RIA firms, compared with $27.1 billion and 152 RIA firms a year ago.


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