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Technology > Investment Platforms > Turnkey Asset Management

Q1 Brings Weaker Results

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Bank of America’s wealth and investment management had about a 2% drop in revenue to $4.4 billion on weaker non-interest income. The unit’s net income, though, rose 13% year over year to $740 million as a result of “solid expense management.” Its pretax margin for the period was 26% vs. 23% in Q1’15.

The number of advisors with Merrill Lynch stands at 14,413, up slightly from the prior year’s headcount of 14,185 but down from the earlier quarter’s 14,499.Advisors produced an average level of yearly fees and commissions of $983,000 as of Q1’16 vs. $1.04 million in the year-ago period and $995,000 in the prior quarter.

Average deposit balances grew nearly by $17 billion, or 7%, as average loans and leases improved by nearly $12 billion, or 9%. Total client balances were $2.46 trillion vs. $2.51 trillion a year ago. Moreover, client flows went into negative territory at –$600 million in Q1’16 vs. positive flows of $14.7 billion in the year-ago period and $6.76 billion in the prior quarter.

The unit says it had a “strong quarter in the institutional retirement business with $7 billion of funded sales from large 401(k) plan wins.”

Wells Fargo

Wells Fargo’s wealth and investment management unit had a 3% year-over-year decline in revenue to about $3.9 billion. Net income also dropped 3% year over year and 14% from the prior period, weakening to $512 million on lower brokerage transaction revenue and asset-based fees. The unit’s total assets were $1.6 trillion, down 2% from last year.

Client assets for the retail brokerage — which includes 15,064 financial advisors — also fell 2% to $1.4 trillion. Advisory assets of $428 billion were down 1%.

The unit had strong loan growth, with average balances growing 22% from Q1’15 “largely due to continued growth in nonconforming mortgage loans and security-based lending.” Wealth management operations reported client assets of $225 billion, down 1% from the year-ago period. Average loan balances rose 9%.

IRA assets of $357 billion were down 2%, while institutional retirement plan assets of $331 billion fell 5%. Asset management operations reported AUM of $481 billion, down 2% from the prior year “due to equity outflows and lower market valuations, partially offset by favorable fixed income and money market net client inflows.”

The wealth and investment management unit’s cross-sell ratio for Q1’16 was 10.55 products per household, up from 10.44 a year ago, according to the bank.

Morgan Stanley

Morgan Stanley reported that its wealth management net income declined 8% from last year to $493 million in Q1’16. Sales weakened about 4% from the year-ago quarter to $3.67 billion.

In addition, the average yearly fees and commissions for its financial advisors, which number 15,888, declined by 4% from last year to $923,000. Total assets for the unit dropped slightly, 2%, to about $2 trillion.

“As we’ve said in the past, we [have] been preparing for this eventuality for a while now, and we’ve been investing for this eventuality,” CFO Jonathan Pruzan explained during a call with equity analysts. “When we put out our 23–25% margin target for next year, we had this in mind.”

As for managed accounts, this business continues to grow, according to Pruzan. The firm has about $800 billion in these accounts, representing roughly 40% of assets.


UBS Group’s New York-based unit reported revenue in the United States, Canada and Latin America of 1.889 billion Swiss francs (some $1.9 billion), up 5% from a year ago. Pretax profits for the Americas unit, however, were 211 million Swiss francs (about $212 million), representing a year-over-year decline of 17%.

UBS Wealth Management Americas had “a solid start to 2016, despite a volatile market environment, with strong net new money and the most productive advisors in the industry,” the company said in a statement. “Our financial advisors continue to be the industry leader in revenue per FA and invested assets per FA.”

Invested assets were flat from a year ago but rose 2% from Dec. 31 to $1.05 trillion, while net new assets were $13.6 billion in the first quarter.

Assets per advisor stand at $147 million, down 2% from a year ago and up 1% from the prior period. The level of average yearly fees and commissions per rep is now $1,064,000, also down 2% from Q1’15 but slightly higher than $1,061,000 in Q4’15.

Advisor headcount in the Americas totals 7,145, a gain of five from 7,140 in Q4’15. “We are continuing our strategy to be disciplined in our recruiting, selectively hiring advisors in the top two quintiles and help advisors in the lowest two quintiles transition out of the firm,” the firm explained.


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