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Q4 Results Posted

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Bank of America‘s Global Wealth and Investment Management unit boosted revenue 3% from a year ago to $4.6 billion in the fourth quarter of 2014 “driven by higher noninterest income with record asset management fees, partially offset by lower transactional activity,” according to company. Merrill Lynch revenue accounted for $3.8 billion, or 83%, of total wealth management sales.

Noninterest expenses, though, grew 5% to $3.4 billion, tied to higher revenue-related incentive compensation and support costs. This contributed to a 9% drop in net income for the unit to $706 million in Q4.

Merrill Lynch’s wealth unit had a 2014 pre-tax margin of 25%, according to its recent earnings report, and a 23% margin in Q4’14.

Client balances increased 6% to $2.5 trillion as of Dec. 31, thanks to both higher market levels and net inflows; $2.03 trillion of the balances are held in Merrill Lynch accounts. The unit’s assets under management totaled $903 billion. Long-term asset flows were $9.4 billion in Q4 and $49.8 billion for the year.

BofA-Merrill says asset management fees grew 16% from a year ago to hit $2.1 billion, while average loan balances expanded 7% to $123.5 billion.

The unit’s total number of wealth advisors increased by 714 advisors from the year-ago quarter and 192 from the third quarter to reach 17,231, and “full-year attrition levels were at historical lows since the Merrill Lynch merger,” the bank said in a statement. The number of financial advisors in the unit was 16,035, up from 15,317 a year ago and from 15,867 in Q3.

Excluding advisors in consumer and business banking, the number of advisors was 14,085 in Q4, an increase from 13,772 a year earlier and from 13,999 in the prior quarter.

Productivity of these Merrill Lynch reps, as measured by average yearly fees and commissions, was roughly $1.07 million in the fourth quarter, down slightly from $1.08 million in Q3 but up from $1.04 million in Q4’13. (UBS Americas’ advisors topped this Q4 production level.)

US Trust currently includes 2,155 advisors, which are not included in the figures for BofA-Merrill reps.

Morgan Stanley

Morgan Stanley’s Wealth Management operations had net revenues of $3.8 billion in Q4, an 8% jump from the prior quarter and a 2% increase from last year. Net income for the group was $736 million, which was down 8% sequentially but up 3% year over year, giving it a 19% pretax margin for Q4’14.

For the year 2014, though, the pre-tax profit margin was 20% on net income of about $3.2 billion compared with a pretax margin of 18% in 2013 on net income of roughly $1.5 billion. Revenue for the unit grew 5% to $14.9 billion.

“Wealth Management continues to improve,” said CEO James Gorman on an analysts call, according to Reuters, and is “on a clear path” to hit 22%–25%.

Fee-based asset flows at Morgan Stanley in the period ending Dec. 31 were $20.8 billion. Total client assets stand at $2.025 trillion, of which $785 billion—or 39%—are in fee-based accounts.

Average assets per advisor are $126 million as of Dec. 31, and advisors had average quarterly fees and commissions of $944,000 in Q4’14. The number of reps at Morgan Stanley dropped to 16,076 in Q4’14, down from 16,162 in Q3’14 and 16,456 in Q4’13.

Wells Fargo

The San Francisco-based company’s Wealth, Brokerage and Retirement unit had net income of $514 million, down $36 million, or 7%, from third quarter of 2014, but up about 5% from $491 million in the year-ago period.

Revenue for the unit was $3.6 billion, though, up $94 million from the prior quarter and $209 million for Q4’13. The unit experienced “strong growth in asset-based fees and higher net interest income [which] were partially offset by lower gains on deferred compensation plan investments (offset in compensation expense) and lower brokerage transaction revenue,” it said in a statement.

As for the retail brokerage, client assets ended the year at $1.4 trillion, up 4% from the prior year. Managed account assets totaled $423 billion, a year-over-year jump of 13%, “reflecting net flows and increased market valuations,” explains the company.

Also, the unit had solid loan growth, with average balances up 21% “largely due to growth in nonconforming mortgages and security-based lending.”

Wealth-management client assets stood at $225 billion as of Dec. 31, up 5% from the prior year. These operations also had loan growth improvement, with average balances up 10% year over year.

Wells Fargo had 19,039 registered representatives as of yearend vs. 18,722 as of Sept. 31. This includes 15,187 financial advisors, up from 15,163 in the prior quarter.

Of these total FAs, 10,119 work at Wells Fargo Advisors branch offices, while 3,324 work in bank branches. The remainder—1,744—are independent reps with Wells Fargo Financial Network (FiNet) or First Clearing. The group also includes 3,852 licensed bankers and 74 clearing firms.

In early February, Wells Fargo Advisors named Jim McHale to the post of chief compliance officer. He reports to Bob Mooney, chief compliance officer of Wells Fargo’s Wealth, Brokerage and Retirement.

Before joining Wells Fargo, McHale worked on an enterprise compliance program at E*Trade. Earlier, he was assistant general counsel for the Securities Industry and Financial Markets Association (SIFMA).

“Jim is an exceptional addition to our team,” said Mary Mack, president and head of Wells Fargo Advisors, in a statement. “He has the skills, perspective and leadership required to help WFA thrive in an increasingly complex and demanding regulatory environment.”


UBS said fourth-quarter results in the group’s wealth-management operations in the Americas included operating income of $1.924 billion in Q4’14, up slightly from $1.919 billion in Q3’14 and an increase of 4% from $1.852 billion in Q4’13.

The company pointed to a drop in fee-based income. “Recurring net fee income decreased by $10 million to $1,187 million, mainly due to lower mutual fund fees partially offset by higher managed-account fees,” it explained in its earnings report. Transaction-based income, though, improved by $7 million to hit $448 million in the fourth quarter, thanks to “slightly higher” client activity.

Still, Wealth Management Americas’ adjusted operating profit before taxes was $217 million, a drop of 15% from the same year-ago period and from the prior quarter.

The Swiss-based firm says the profit drop stemmed from a nearly $30 million jump in personnel expenses, which totaled about $1.4 million in the fourth quarter.

“The increase was mainly due to higher financial advisor compensation … and higher variable compensation expenses,” it said in its earnings report. “Expenses for compensation commitments related to recruited financial advisors increased by $4 million to $187 million.”

UBS has a need to focus on recruitment. Its advisor headcount in the Americas was 6,997 as of Dec. 31, down 1.5% from 7,114 in the third quarter and a decrease of 2% for 7,137 a year ago.

The firm, though, says the drop in reps is “consistent with our stated strategy of retaining and attracting the top producers in U.S. wealth management and keeping our advisor force in the 6,500–7,000 range.

Plus, it says that “more than two-thirds of the advisors who left UBS were in the lowest-producing two quintiles or not ranked at all.”

Of the total veteran advisors recruited in Q4, three-quarters “were ranked in the top two quintiles,” UBS adds.

Average production, or fees and commissions per advisor, stood at $1,091,000 in Q4’14, up 1% from $1,079,000 in Q3’14 and up 5% from $1,042,000 in Q4’13. Averaged invested asset per advisor reached $147 million in Q4, a 3% rise from the earlier quarter and an 8% jump from a year ago.

Total client assets reached $1.032 trillion as of Dec. 31, a jump of 2% from the prior period and 6% from a year ago. Net new money (or NNM) for the period was $5.5 billion vs. $4.9 billion in Q3.

“Including interest and dividends, NNM was $15.9 billion in Q4’14, up 51% from $10.5 billion in Q3’14. The increase in NNM was driven main by advisors with UBS longer than a year (‘same-store advisors’),” UBS said in a statement.


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