With DOL fiduciary rule looming, Merrill sees surge of AUM

Long-term flows to accounts that charge an asset under management fee were up 54% in the first quarter

Apr 18, 2017 @ 12:59 pm

By Bruce Kelly

Merrill Lynch, Bank of America's wealth management business, saw a surge in advisory assets in the first quarter of 2017, months after the company said it was eliminating charging commissions in new retirement accounts as a response to the Department of Labor's pending fiduciary rule for brokerage accounts.

As part of its first-quarter earnings release on Tuesday, the bank's global wealth and investment management group reported record long-term flows to accounts that charge an asset under management fee of $29.2 billion for the quarter that ended in March. That's an increase of 54.5% over the final quarter of 2016, when the global wealth group reported $18.9 billion of asset under management flows, according to the company. For the same quarter in 2016, the company reported negative long-term flows to assets under management of $600 million.

The asset management flows reflect net new assets as well as clients shifting IRA brokerage accounts that charge a commission to those that charge an AUM fee. The company did not break out the difference between net new assets and assets that had moved from commission accounts.

"Our wealth management business had strong asset under management flows," said the bank's CEO, Brian Moynihan, in a statement. "The U.S. economy continues to show consumer and business optimism, and our results reflect that."

The surge in advisory assets comes in the wake of Merrill Lynch saying last October it would no longer offer new, commission-based IRAs starting this year. The firm's clients who had assets in IRA brokerage accounts would have the option to transition onto Merrill One, the firm's investment advisory platform, or onto Merrill Edge, where clients can use the firm's self-directed brokerage platform or its robo-advisory services.

Merrill Lynch was the first — and one of only a handful of firms — to announce such a shift away from charging brokerage commissions in retirement accounts because of the pending DOL rule, which was slated to take effect April 10 but has been delayed at least 60 days. Last month, Merrill gave itself some wiggle room regarding the rule's implementation when the head of Merrill Lynch wealth management, Andy Sieg, said the firm may back off from the wholesale scrapping of commissions in retirement accounts.

Meanwhile, the headcount of Merrill Lynch brokers declined by 145 during the quarter and totaled 14,484 at the end of March. For the 12 months ended in March, Merrill Lynch saw an adviser increase of 72. The decline of the number of advisers in the first quarter of 2017 was due to a combination of seasonally lower hiring during the quarter and an expected increase in the number of advisers retiring, according to the company.

Merrill Lynch Wealth Management reported revenue of $3.8 billion, an increase of 5% for the last three months of 2016 and up 3.1% for the prior 12 months, according to the company.

0
Comments

What do you think?

View comments

Recommended for you

Featured video

Events

What's the top issue on advisers minds?

Laura Pierson from Carson Group discusses how the old topic of 'Human Capital' is hot again because of millennials.

Latest news & opinion

New ways to pay for college

Experts respond to real-life scenarios of people struggling to afford higher education.

How technology is reshaping the advice business

Artificial intelligence, Amazon and robo-advisers are some of the topics on the minds of tech experts.

Best- and worst-performing sector funds and ETFs this year

A rising tide may lift all ships, but a bull market doesn't lift all stock sectors. Here are the best- and worst-performing sectors this year, with the top and bottom fund in each sector.

Betterment slapped with $400,000 fine from Finra

Robo-adviser cited for violating customer protection rule and not maintaining its books and records correctly.

Supreme Court ruling on SEC judges unlikely to upend advice industry

But it could give rise to new hearings for some advisers who are already in litigation with the agency such as Dawn Bennett.

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