Merrill Lynch prospers as advisers depart

BofA unit delivered $719 million in profit, up 25% from a year earlier.
OCT 20, 2013
Bank of America Merrill Lynch is doing more with less. The brokerage firm's business unit last quarter delivered $719 million in profit to its parent company, Bank of America Corp., even as the country's largest such firm by assets under management continued a long-term trend of losing financial advisers, BofA executives said last Wednesday. That profit increased by more than 25% from a year earlier and helped lift the nation's second-largest lender to a $2.5 billion profit overall.

Record fees on assets

The strong performance at Bank of America Merrill Lynch was driven in part by record-level fees on assets, which increased both because of market performance and new assets from clients, according to BofA chief financial officer Bruce Thompson. Those asset-based fees helped brokerage firms compensate for decreased transactions last quarter. Still, Merrill Lynch continued a long-term trend of losing financial advisers, with 135 departing in the three-month period ended Sept. 30. Head count stands at 15,624 advisers, about 6.8% lower than on Sept. 30, 2012, the bank said. 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 firm'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 comparable period a year earlier. BofA said that its decrease in advisers was driven primarily by attrition of low-producing advisers and trainees.

Low turnover

Merrill's overall turnover is historically low and its total losses to major competitors are the lowest in nearly three years, spokeswoman Susan McCabe said. Client assets grew to $1.854 trillion in the quarter, up 2.99% from the previous quarter and 7.1% from a year earlier. That was driven by asset flows into adviser-managed, long-term investment strategies, which increased 78.9% to $10.3 billion during the quarter. BofA's wealth management division also includes the U.S. Trust private banking business.

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