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Industry Spotlight > Wirehouse Firms

Merrill, Private Bank Profits Jump 28%; Advisor Headcount Dips

By Jeff Berman

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What You Need to Know

  • BofA's wealth management unit ended Q1 with 18,600 advisors, down from 18,846 at the end of Q1.
  • There are now about 2,000 advisors across the new Merrill training program and legacy training program combined.
  • The company still expects 1,000 advisors will graduate each year from the new training program.

Profit in Bank of America’s global wealth and investment management division, which includes Merrill and BofA Private Bank, grew 28% from last year to $1.1 billion in the first quarter ended March 31, the company said Monday.

Revenue in the division, meanwhile, jumped 10% from a year ago to $5.5 billion in Q1, with Merrill revenue increasing 10% to $4.6 billion and Private Bank revenue jumping 13% to $887 million, BofA said.

Merrill client balances were $3.1 trillion, up 7% from a year ago, while Private Bank client balances were up 7% to $598 billion. Consumer investments grew 12% to $477 billion.

“We added nearly 7,800 net new client relationships” in Merrill and Private Bank in Q1, Andy Sieg, president of Merrill Lynch Wealth Management, told reporters during a phone briefing Monday morning.

Merrill added 6,900 net new client relationships in Q1, up 9% from a year ago, as assets under management grew 8% to $1.2 trillion and planning conversations increased 29%.

Merrill's New Training Program: Less Selling, More Coaching, Plenty of Skepticism

Wirehouse Firms

Private Bank added 830 net new client relationships, up 24% from a year ago, as AUM increased 3% to $334 billion.

Private Bank and consumer investments grew 7%, which the company said drove $38 billion in client balance flows in Q1.

Although the bank’s overall revenue, net of interest expense, increased 2.3% to $23.2 billion, overall income dipped to $7.1 billion from $8.1 billion.

“Across our businesses, ongoing organic growth combined with good expense management drove operating leverage for the third consecutive quarter,” according to Brian Moynihan, BofA CEO.

“Our teammates supported our clients while managing through the impacts of the pandemic, war in Ukraine, and an evolving rate environment,” he said in the bank’s earnings news release. “Our strong first quarter client activity drove results that allow us to deliver for shareholders while continuing to invest in our people, businesses, and communities.”

Demand for Advisors

“We continue to see a high demand for professional financial advice, and this was particularly true during a quarter where we experienced geopolitical uncertainty, accelerated inflation, energy concerns — all of which caused volatile markets and, at times, emotions ran high,” Sieg told reporters.

“Our advisors have helped clients keep the headlines in perspective, resist the temptation to buy high and sell low, and remain focused on long-term goals,” he said. “And all this has led to a strong increase in client discussions around goals and asset allocation.”

Financial planning reports were up almost 30% in Q1 vs. a year ago, which he said is a “great reflection around this engagement by advisors with clients.”

Advisors are also now back in Merrill offices to meet with clients after many of them worked remotely since the start of the pandemic, he added.

Headcount Dips

The company ended Q1 with 18,600 advisors in the wealth and investment management division, Sieg said. That was down from 18,846 at the end of Q1.

The rate of attrition among Merrill’s experienced advisors was 3.6% in Q1, which Sieg told reporters was again lower than the wirehouse’s historical average. The number of Private Client advisors, meanwhile, grew 8% to 500 in the quarter.

The decline in advisor headcount was again due largely to the wirehouse’s 18-month pause in hiring trainees during the pandemic and in preparation of launching its new advisor development program in summer 2021, Sieg said.

Training Program

“There are approximately 2,000 advisors across the new training program and our legacy training program,” he told reporters. “Now that number will be growing. But that total 2,000 is down more than a thousand versus a year ago. And, if we look back a couple of years, there were more like 3,500 trainees in our development program.”

There were about 1,000 advisors who entered the new training program as of the last earnings call, the according to the company.

The new program is “performing well” overall so far, Sieg went on to say. The company is still looking to graduate 1,000 advisors from the new program each year and “will be building toward that number over time,” he told reporters.

The company said during its prior earnings call that the program would “scale in the course of this year” and, “quarter by quarter, you’ll see the ranks of this program increase.”

Next-Gen and Retirement Programs

The wirehouse has also been bringing in, over the past couple of years, early career advisors from rival firms as part of Merrill’s Accelerated Growth Program, with about 200 being added each year, he also said.

That is “another important way to develop next-generation advisor talent,” he explained, adding: “This year, we’re looking to more than double the annual AGP hiring” to add 500 of these early-career advisors.

Meanwhile, there have been “significantly fewer” advisors than expected going into the new, enhanced version of the firm’s retirement program, the Client Transition Program, that launched in the fall, Sieg noted.

The company still expects its overall headcount will increase by 3% to 4% annually over the next five to 10 years, for a net increase of 600-700 advisors each year, Sieg said, responding to a question from ThinkAdvisor.

Alternative Investment, Digital Engagement Growth

The company continued to see growth in alternative investments and digital engagement in Q1, Sieg said.

Alternative investment AUM balances jumped 40% to over $70 billion from a year ago, while gross sales in Q1 soared over 100% to $5.9 billion, the company said.

Meanwhile, a record 81% of wealth management clients are actively using online or mobile platforms, Sieg told reporters. “Advisors are also increasingly leveraging digital solutions,” he said.

Wealth management client interactions with Erica, BofA’s artificial intelligence-driven virtual voice assistant that is part of its Digital Wealth Overview tool that launched in early 2021, increased 19% from a year ago and 1.7 million secure messages were sent between advisors and clients, the company said.

Merrill Mobile Advisor Experience (MAX), which launched in August and gives advisors access to a full range of workstation features while on the go, was used almost 350,000 times in Q1, up 56% from the fourth quarter, the company said. Sieg predicted that number would continue to increase.

(Pictured: A Merrill Lynch branch office; Photo: AP)

Jeff Berman

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