Bank of America’s wealth group now works with $3 trillion. That level continues to grow thanks to Merrill advisors’ push to bring in new client households — which totaled 40,800 last year — and strong market performance.
The number of Merrill financial advisors stands at about 17,500, with the average level of 12-month fees and commissions at $1.1 million for 2019. Veteran FAs brought on an average of 5.5 new households last year, with an average household size of $1.3 million.
How does it see its performance improving further in 2020? A senior executive at the wirehouse, who spoke to the media Wednesday, highlighted the following six areas.
(Merrill executives provide quarterly updates to reporters on the firm’s plans on the condition the executive not be named.)
1. Sourcing Recruits
While the firm is focused on the organic growth of its Thundering Herd, it is seeing “more interest … from advisors who want to join us,” the executive said.
“Where we make offers is lower-lengths-of-service advisors, from two to seven years of service, and who today are not working at the other wirehouses,” he explained.
This means hiring those from regional firms or RIAs, “and they are joining us through our Accelerated Growth Program,” he added.
“Hiring in this area has increased substantially in ‘19 over ‘18, and we think there continues to be some upside there.”
Competitive attrition of Merrill advisors — or the share of reps leaving the firm — was roughly 4% last year.
2. Diversity and Inclusion
Building a “modern Merrill in 2020” requires further diversity and inclusion, the executive said.
“We have most the most diverse class of trainees in the history of the program — 30% female and more than a third ethnically diverse,” he explained. The firm also is making more diversity-focused hiring across the firm and “at all levels,” he added, “to reflect the increasing diversity of the client population, … and we are very proud of that progress.”
3. The Protocol
“There is no dialogue here on revisiting our position on the Protocol” for Broker Recruiting, which aims to limit lawsuits tied to advisor movement between firms, said the executive. “We are very comfortable remaining in the protocol.”
Rivals Morgan Stanley and UBS have both left the arrangement.
Still, Merrill insists its focus is not on recruiting but “on being the most growth-oriented firm for financial advisors on the Street.”
4. Growth Grid
The firm’s growth grid — which requires advisors to add about six new households for certain awards and at least four to avoid penalties — continues to be seen by management as “an important part of how we turn the growth engine on as a firm,” the executive said.
For 2019, 70% of its advisors benefited or saw “no impact” from it vs. 30% being penalized, “consistent with 2018.”
“The number [of those benefiting or seeing no impact] was slightly better last year by …. a couple percentage points vs 2018,” he said. “We feel the program is functioning very well and accrued to the benefit of our advisors overall … and we did raise the hurdles in 2019.”
The general lack of change in the 70/30 split shows that “advisors responded and stepped up in terms of client development and a focus on flows in order to continue achieving the benefit of the growth grid despite higher goals,” according to the executive.
The Growth Grid is unchanged for 2020.
5. Client Associates
The firm is investing in training for its roughly 6,500 client associates, so that they can move into advisor positions “which benefits us in a number of ways to … [better] serve clients,” he said.
“We are seeing a meaningful number of client associates choose to move into becoming financial advisors,” according to the executive.
“By doubling down on investment in training and development, that means we have a careers path that can be more frequently utilized by client associates and bring people earlier in their careers into advisor training,” he explained.
6. Tech Tools
Explaining that over 70% of clients are using Bank of America and Merrill online/mobile platforms — with 44% on the MyMerrill app — the executive said the company plans to further “accelerate technology enhancements to transform the way clients and advisors interact.”
In 2019, clients could use the app to scan, sign and upload documents, for instance.
“We doubled the number of Merrill digital specialists in the field, which is now 30, from a year ago,” he added. “They work directly with financial advisors on the utilization and incorporation of technology. This gives us an enormous competitive advantage … and a client experience that is second to none.”
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