Merrill achieves record third quarter despite market volatility

Editor’s note: This story has been clarified to explain better the asset under management flows for the entire wealth management business of Bank of America.

The investment advisory division of Merrill Lynch achieved strong third-quarter results while stocks slid into bear territory and a potential recession approached, an outcome that an executive attributed partly to the firm’s financial advisers.

Merrill Lynch Wealth Management produced $4.5 billion in revenue in the third quarter and $13.6 billion so far this year, a 6% increase from this time last year. Net interest income also hit a record of $1.5 billion, up 39% year-over-year.

When the wealth management unit is combined with Merrill’s private bank, they achieved a record quarterly revenue of $5.4 billion, a 2% year-over-year increase. The businesses also generated records for pretax earnings — $4.6 billion year-to-date — and net interest income, which was $2 billion, a 36% year-over-year increase.

“Despite turbulent markets, Bank of America’s wealth management businesses delivered record third-quarter results by multiple measures,” Andy Sieg, president of Merrill Lynch Wealth Management, said Monday while releasing the results on a conference call with reporters. “This is thanks in large part to the strong efforts of our advisers to meet the needs of new and existing clients and also thanks to the diversification and modernization of our business model.”

The interest rate hikes the Federal Reserve has imposed this year helped boost Merrill’s financial results.

“A rising-rate environment benefitted all businesses of Bank of America, including wealth,” said Ken Leon, director of equity research at CFRA Research, referring to Merrill Lynch’s parent company.

Merrill advisers also are playing an important role, Sieg said. They’re helping their clients stay calm while markets and the economy falter, an effort that has led to higher client satisfaction and retention.

“We think we’re in a bull market for advice, and it’s times like these that investors need advice more than ever,” Sieg said.

The net assets under management flow for the entire Bank of America wealth management business was $4.1 billion in the third quarter, Leon said. That’s up from the second quarter but a significant decline from last year at this time, when the market was in better shape.

Merrill Lynch Wealth Management added nearly 5,200 net new households in the third quarter — a 23% year-over-year increase — and about 17,000 so far this year, Sieg said.

The number of advisers across Merrill's wealth operations rose 400 in the third quarter to 18,841, which included an increase of 97 advisers at Merrill Lynch Wealth Management. Sieg called it “our strongest recruiting quarter in over a decade.”

Leon characterized the overall increase of 400 Merrill advisers as “kind of neutral.”

Merrill programs for attracting and training advisers contributed to the uptick in the number of advisers, Sieg said. He also credited the breadth of the advisory, banking, lending, trust and other services advisers can draw on to assist their clients.

“if you are intending to have a long and successful career as an adviser, Merrill Lynch Wealth Management remains the destination of choice,” he said. “There are no advisers in the market that can bring the range of integrated high-quality solutions to high-net-worth and ultra-high-net-worth clients that members of the thundering herd can.”