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Technology > Investment Platforms > Turnkey Asset Management

Merrill vs. Morgan Stanley: Q2 Results

By Janet Levaux

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The second-quarter was generally positive for the large banks and broker-dealers. Assets have been rising, along with the markets.

Bank of America’s Global Wealth & Investment Management unit, which includes Merrill Lynch, “delivered its second-best quarter on record,” according to the company, thanks to “strong client balance growth and activity across Merrill Lynch and U.S. Trust.”

Meanwhile, Morgan Stanley’s wealth business “remained solid,” Chairman and CEO James Gorman said on a call with equity analysts last month. “Our technological capabilities have evolved from an exploratory phase in the tangible tools that aim to enhance FA productivity, streamline operations and support further asset growth.”

But not all the news was good. Digging down into several key performance measures, here’s how the two largest wirehouses stand:

Advisor Headcount: Morgan Stanley saw its number of advisors focused on high-net-worth clients fall year over year by 145 reps to 15,632. Still, this topped Merrill’s core figure.

The number of Merrill Lynch advisors serving clients in branch offices stood at 14,820 (excluding those with the mass-affluent Merrill Edge operations). That figure, though, rose by 70 from last year.

BofA’s broader wealth unit has 20,447 total sales professionals, including the Merrill advisor force and 1,722 reps at US Trust.

Advisor fees and commissions: As for average 12-month advisor production, Morgan Stanley advisors are at $1.105 million — up 5% from a year ago, but down 1% from the first quarter.

The overall level at Merrill Lynch stands at $1.017 million, down about 2% from last year and last quarter. But veteran advisors, the company says, have average annual production of $1.36 million based on their performance in the first half of 2018.

Assets: Morgan Stanley’s total level of client assets jumped 8% year over year to $2.41 trillion as of June 30. Fee-based assets grew 13% to end the second quarter at $1.08 trillion.

Merrill Lynch’s assets improved 5% from last year to total $2.31 trillion as of June 30. BofA’s broader wealth unit, which includes US Trust assets, also grew 5% to $2.75 trillion of client assets.

Asset flows: Morgan Stanley said it had fee-based asset flows of about $15 billion in Q2’18 vs. $18 billion in Q1’18 and $20 billion in Q2’17, a 17% year-over-year decline.

BofA wealth had inflows of $11 billion in Q2’18. This represents a drop of about 60% from flows of nearly $28 billion in the year-ago quarter.

Pretax margin: BofA’s wealth unit came in at 28% in the quarter vs. 27% at Morgan Stanley.

Janet Levaux

@Think_JanetL

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