The latest financial figures show growth in wealth management overall, though firms showed differences in asset flows and headcount changes. Here’s a summary of how the largest industry players performed:
The company had overall net income of $492 million, or $3.57 per share vs. $462 million, or $3.10 per share, a year earlier. Its revenue grew 2% year over year to $3.25 billion. The Advice & Wealth Management unit grew its revenues 8% over last year to $1.69 million, and its pretax profits were up 7% to $376 million.
Advisors total 9,951, a gain of 45 from Q2’18 but down 28 from Q1’19. About 2,200 of these advisors are employees, with the rest being independent contractors. These reps have average trailing 12-month fees and commissions of $638,000. Client assets for the business are $607.5 million, up 7% from a year ago; it had $4.8 billion net wrap inflows in Q2’19.
LPL Financial: The independent broker-dealer had a 23% year-over-year jump in net income to $146 million for the quarter ended June 30, while earnings per share rose 32% over the year-ago period; sales grew 7% to $139 billion.
The independent broker-dealer had net asset inflows of $4 billion in the quarter and $8.5 billion of recruited assets, bringing its trailing 12-month total to about $33 billion. Its total assets grew 7% year over year to $706 billion, while its advisor headcount is 16,161 — up 112 from last year but down 28 from the prior quarter.
According to CEO and President Dan Arnold, the IBD’s new advisory oriented and independent employee models “more than double the size of our addressable market.” LPL’s Advisor Sleeve program has attracted $600 million from some 1,500 advisors; the service lets advisors run custom portfolios and use LPL for monitoring, rebalancing and tax management.
The global wealth unit of Bank of America, which includes Merrill Lynch and Bank of America Private Bank, grew its revenue 4% year over year to about $4.9 billion in the second quarter of 2019, while net income jumped 10.5% to over $1.07 billion. (BofA overall had an 8% year-over-year jump in profits to $7.35 billion in the second quarter. Earnings per share rose 13% to $0.74 per share, but revenue grew just 2% to $23.08 billion.)
But the Merrill headcount, now at 14,690, is down 130 from a year ago and 71 from the prior quarter. Total client balances for the broader global wealth unit are $2.9 trillion vs. $2.75 trillion a year ago. Asset flows for the quarter in the global wealth business were $5.3 billion, down about 50% from last year’s $10.4 billion.
The average level of yearly fees and commissions per Merrill Lynch FA, though, grew to $1.08 million from $1.02 million in the year-ago period.
Merrill says it will not be moving into an RIA channel anytime soon, unlike rival Wells Fargo and Goldman Sachs. As for a move into a subscription model, as Charles Schwab did earlier this year, BofA’s global wealth unit is “continuously evaluating pricing strategies,” a senior leader said, adding that 82% of its current revenue comes from fees on assets under management and net interest income tied to deposits and loans.
The bank’s wealth management business — which includes 15,633 advisors — grew net income 9% year over year to $953 million and sales 2% to $4.41 billion. Still, the firm’s overall revenues were $10.2 billion, down 3% from last year. And its profits fell 10% to $2.2 billion, or $1.23 per share.
Overall, the company’s advisor headcount rose by one from a year ago but is down 75 from the prior quarter. Average yearly fees and commissions per advisor of $1.13 million are up slightly from $1.11 million a year ago and down from $1.19 million in the prior quarter. The average level of assets per advisor is $164 million, and total assets in the wealth unit are $2.6 trillion.
As for net fee-based asset flows, they stood at $9.8 billion for Q2’19; this is down about 35% from both Q2’18 and 1Q’19. Morgan Stanley’s fee-based asset level is about $1.16 trillion and represents 45% of total assets.