Merrill Lynch adviser head count drops as self-directed investing soars

Merrill Lynch, the wealth management arm of Bank of America Corp., reported a 6% decrease in its overall head count of registered reps and financial advisers, at the same time the firm’s self-directed investing platform experienced gains.

As part of Bank of America’s second-quarter earnings Wednesday morning, Merrill Lynch reported a year-over-year decline of 1,237 total wealth advisers, including those at its Merrill, Private Bank and consumer investments businesses, for the second quarter, for a total of 19,385 advisers at the end of June. In June 2020, the bank had a total of 20,622 advisers. 

During the first quarter, by comparison, Merrill Lynch reported a decline of 585 advisers at the end of March compared with the prior-year period. 

In a conference call with reporters Wednesday, a senior Merrill Lynch executive, who asked not to be named, said the decline in advisers during the second quarter is partly due to a “small number of adviser trainees” who did not accept positions in the firm’s new adviser development program at the end of June. However, the executive said that 92% of trainees signed on to the new program. 

“That head count removal, along with slower hiring over the last several quarters, brought our adviser count down slightly this quarter,” the executive said. “Overall, as we look to the medium and long term, we continue to anticipate low single-digit growth in our adviser population annually over the years to come, driven in large part by increasing the overall success rate of the next generation of advisers.”

In May, Merrill Lynch unveiled details of its updated adviser development program, or ADP as the wirehouse is calling it, after a year of teasing that it was overhauling training practices for new financial advisers. Merrill is anticipating that it can graduate 1,000 new advisers per year with the new program, shrinking training time to 18 months from 36 months and securing an 80% graduation rate.

During the call, the executive emphasized that more than 80,000 Merrill Lynch Wealth Management clients are now using the firm’s self-directed investing platform, Merrill Edge Guided Investing, a 16% increase year over year representing $45 billion in client assets. 

“We’re seeing clients move their self-directed trading from a third party over to the Edge business,” the executive said. In March, Merrill lowered the minimum for its digital advice platform and opened it up for clients who have at least $1,000 to invest with the Bank of America unit. 

Merrill Lynch has also been putting its more than $3 billion in technology investments to use over the last 12 months. It launched its Personal Wealth Analysis tool last August, a tech-driven adviser workstation last June, and interactive video account summaries in March. 

The Personal Wealth Analysis tool helped bring in more than $3 billion in new client assets during the second quarter, the executive said, and it has helped attract more than $10 billion in assets since its launch a year ago. 

Merrill Lynch client balances at the end of June clocked in at $4.1 trillion. Second-quarter revenue at the Merrill Lynch wealth management franchise increased 16% year over year to a record $4.3 billion, and advisers added 6,000 net new households during the second quarter, bringing net new households for the first half of the year to 12,400.