Merrill delivers profit to Bank of America as adviser ranks shrink more

Productivity per adviser climbs 11.5%; market gains, asset flows boost the bottom line

Oct 16, 2013 @ 10:08 am

By Trevor Hunnicutt

Bank of America Merrill Lynch is doing more with less.

The brokerage’s business unit last quarter delivered $719 million in profit to its parent company, Bank of America Corp., even as the country's largest brokerage by assets under management continued a long-term trend of losing financial advisers, BofA executives said Wednesday.

Check out Merrill Lynch's 3Q adviser departures

That profit increased by more than 25% from the same period last year and helped lift the nation's second-largest lender to a $2.5 billion profit overall.

The strong performance at Bank of America Merrill Lynch was driven in part by record-level fees on assets, which increased both because of strong market performance and new assets from clients, according to Bank of America chief financial officer Bruce Thompson. Those asset-based fees helped brokerages compensate for decreased transactions last quarter.

Still, Merrill Lynch continued a long-term trend of losing advisers, with 135 departing in the three months ended Sept. 30. Head count currently stands at 15,624 advisers, the bank said, about 6.8% lower than at the end of the same quarter in 2012.

See all of Merrill Lynch's reported adviser departures during 2013.

Those losses included the departure to Deutsche Bank AG in August of a Houston-based team of three advisers who managed $1 billion in assets.

But the productivity of the brokerage's advisers has increased substantially in the last year. On average, each Merrill adviser stands to generate about $1 million a year, up 11.5% from the same period in 2012.

Bank of America said its decrease in advisers was primarily driven by attrition of low-producing advisers and trainees. Spokeswoman Susan McCabe said Merrill’s overall turnover is historically low and that their total losses to major competitors are the lowest in nearly three years.

Client assets grew to $1.854 trillion in the quarter, up 2.99% from last quarter and 7.10% from the same period last year. That was driven by asset flows into adviser-managed, long-term investment strategies, which increased 78.9% to $10.3 billion in the quarter.

Merrill Lynch is the second of the top three wirehouses to report earnings. Wells Fargo Advisors, which ranks third, reported last week that asset-based fees, rather than transactions, also drove profits. Morgan Stanley Wealth Management, the largest firm by head count, will report its performance on Friday. (See: Wealth management helps drive Wells Fargo third quarter)

Bank of America shares traded up 2.18% to $14.55 in afternoon trading.

Bank of America Corp.'s wealth management division also includes the U.S. Trust private banking business.

0
Comments

What do you think?

View comments

Recommended for you

Featured video

INTV

Surprises when reporting on Morningstar

Assistant managing editor Susan Kelly speaks with senior columnist John Waggoner about the interesting discoveries he found in speaking with the analytics giant.

Latest news & opinion

Morningstar evolving well beyond its origins analyzing mutual funds

Led by CEO Kunal Kapoor, firm is moving way past ratings — and financial advisers are paying close attention.

Focus Financial IPO could be a sell signal for RIAs

The $100 million stock offering will fine-tune RIA valuations.

Ex-Edward Jones broker sues former firm, alleging racial bias

Complaint alleges the firm's policies limit African-Americans' 'income and advancement opportunities'

Piwowar defends SEC's best-interest rule

SEC commissioner says the Department of Labor rule set up an 'unworkable, impossible set of standards for people to comply with.'

RIA in a Box acquired by private equity firm Aquiline Capital

New owners plan more growth for the software service provider.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print