BofA Wealth Unit's Profits Jump 10%

Bank of America’s Global Wealth and Investment Management unit saw its first-quarter revenue grow 5% year over year to $5.6 billlion, while its profits jumped 10% to $1 billion.

“Record revenue … increased 5% from Q1’23, driven by 12% higher asset management fees, due to higher market levels and strong AUM flows, partially offset by lower net interest income,” the firm said Tuesday in its latest earnings report.

Total client assets for Merrill Lynch Wealth Management neared $3.4 trillion, while BofA Private Bank assets were roughly $663.7 billion.

On a combined basis, the bank’s GWIM business unit reported client balances of nearly $4 trillion for the period ending March 31, up 13% from a year ago, driven by higher market valuations and positive net client flows.

(Rival Morgan Stanley’s wealth unit had $5.5 trillion of client assets as of March 31 — $4.3 trillion of which are in its advisor-led channel.)

Merrill gained about 7,300 net new client relationships in the first quarter, in line with the two prior quarters but down on a yearly basis, according to Lindsay Hans and Eric Schimpf, co-heads of the business.

“Many of the new relationships start within the retail bank, and they are then connected to us for their growing and more complex wealth needs,” Hans said Tuesday on a call with media.

“In Q1, we nearly doubled the new assets generated from these inbound referrals, and that’s over a record pace set in 2023,” he said. “The scale of this opportunity is incredible, with 69 million customers at the commercial bank.”

GWIM’s net flows of assets under management in the latest period were $24.7 billion, up from  $15.2 billion a year ago and $8.4 billion in the prior period.

Bank Relationships

Many banking clients have sufficient wealth and financial complexity to be served by a Merrill advisor, Hans emphasized.

“If we get a third of these customers to work with wealth management, we would double the business at Merrill,” he said. “Beyond the retail relationships, our commercial and corporate bankers are also introducing us to thousands of new clients every year.”

Both Hans and Schimpf expect the broader industry shift from brokerage services toward fee-based wealth management to keep benefiting the firm’s results going forward.

Schimpf pointed to strong results stemming from the firm’s premium access strategies, which offer enhanced customization, professional portfolio oversight and negotiable manager pricing to clients with at least $5 million in combined assets at Merrill and BofA or over $10 million in total investable assets (including assets held outside the firm).

“Alternative investments are a strong value add area for us, too,” Schimpf said. “Our alts assets have doubled in the past five years, and now we have more registered structures to offer to our clients. Today, more than one-third of alts on our platform are available to investors with $1 million or more in assets. Our advisors have leaned into this.”

HNW, UHNW Outlook

The executives said demand is growing for different support services among high- and ultra-high-net-worth clients, including customized lending solutions that help clients unlock liquid capital from assets of many different types.

“The loan proceeds help our clients do things like buy businesses, acquire properties and more, all while keeping long-term investment strategy in place,” Schimpf said, noting demand for this service is up significantly year over year.

According to Hans and Schimpf, Merrill Wealth Management remains focused on growing its advisor talent pipeline, both through the onboarding of experienced advisors and through its training programs.

“We are committed to this in all phases of the advisor’s career,” Schimpf said. “Our growth strategy is centered on training, and we have 2,300 trainees in the pipeline right now who represent the next generation in our business.”

– Janet Levaux contributed to this report.

Credit: Bloomberg