Bank of America Merrill Lynch appears to have stabilized its head count after the “thundering herd” of financial advisers dipped as low as 13,725 in the first quarter this year.
The firm reported that its adviser force had climbed back to 14,000 in the third quarter, marking the second consecutive quarter of growth, thanks to improved retention of its experienced financial advisers, additional recruiting and an influx of recent graduates from its Practice Management and Development training program.
“We have increased the number of financial advisers, and year-to-date retention of our more-experienced advisers remains at record levels,” Bank of America's chief financial officer Bruce Thompson said on a quarterly earnings call.
Merrill Lynch's head count has seen a mostly steady decline in the past two years. In the third quarter of 2012, for example, the firm had 16,076 brokers and advisers. By 2013, that number shrank to 14,039, a decline of around 15% from the 16,400 advisers Bank of America acquired in January 2009 as a result of its acquisition of Merrill Lynch.
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That has put it in third place by head count as compared to among the four so-called wirehouse firms. Wells Fargo Advisors, which reported earnings on Tuesday, had 15,163 advisers at the end of the third quarter. Morgan Stanley Wealth Management, which reports later this week, had just over 16,300 advisers at the end of the second quarter.
The 14,000, while still below the 14,039 in the third quarter last year, represents two consecutive quarters of steady growth. In the third quarter alone, a net of 155 advisers were added.
That 155 includes both veteran advisers and trainees. Trainees are added into the head count as soon as they are accepted into the program, although they may not be fully licensed, according to spokeswoman Susan McCabe. The program lasts more than three years.
The firm, which said earlier this year it was aiming to bring in 1,700 trainees this year, graduated 103 PMD trainees in the third quarter and 320 had graduated year-to-date, she said.
“We are focused on growing through our PMD program as well as through selective and thoughtful recruiting,” Ms. McCabe wrote in an e-mail.
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The firm has not outlined an ideal target for overall head count, but the head of the brokerage force, John Thiel, told
Reuters in an interview in June that, “We want to grow.”
The firm's productivity per adviser continued to climb, up slightly to $1.077 million annual revenue per adviser, up from $1.06 million last quarter and up from $1 million a year ago. UBS Wealth Management Americas is the only other firm reporting advisers with over $1 million in annual revenue on average, but the firm has yet to report third-quarter results.
That helped the firm's global wealth and investment management unit, which includes both Merrill Lynch and its private banking operation, U.S. Trust, swing a record net income of $813 million from $4.7 billion in revenue.
The global wealth unit, which has some of the highest margins of the large brokerage firms, reported that pretax profit for the group hit 27.4%, up from 25.5% a year ago. On the call, Mr. Thompson attributed the improvement to better expense management and lower litigation costs in the wealth management group.
The firm recently wrapped up a significant amount of spending on rolling out its new technology platform, Merrill Lynch One, he said.
“There was a little less litigation in the quarter, which benefited us, but it tends to be just across-the- board lower support costs, lower licensing fees, and a little less litigation,” Mr. Thompson said. “There's no one number that would dominate [expense reduction].”
