Merrill delivers profit to Bank of America as adviser ranks shrink more

Productivity per adviser climbs 11.5%; market gains, asset flows boost the bottom line
JAN 06, 2014
Bank of America Merrill Lynch is doing more with less. The brokerage’s business unit last quarter delivered $719 million in profit to its parent company, Bank of America Corp., even as the country's largest brokerage by assets under management continued a long-term trend of losing financial advisers, BofA executives said Wednesday. Check out Merrill Lynch's 3Q adviser departures That profit increased by more than 25% from the same period last year and helped lift the nation's second-largest lender to a $2.5 billion profit overall. The strong performance at Bank of America Merrill Lynch was driven in part by record-level fees on assets, which increased both because of strong market performance and new assets from clients, according to Bank of America chief financial officer Bruce Thompson. Those asset-based fees helped brokerages compensate for decreased transactions last quarter. Still, Merrill Lynch continued a long-term trend of losing advisers, with 135 departing in the three months ended Sept. 30. Head count currently stands at 15,624 advisers, the bank said, about 6.8% lower than at the end of the same quarter in 2012. See all of Merrill Lynch's reported adviser departures during 2013. 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'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 same period in 2012. Bank of America said its decrease in advisers was primarily driven by attrition of low-producing advisers and trainees. Spokeswoman Susan McCabe said Merrill’s overall turnover is historically low and that their total losses to major competitors are the lowest in nearly three years. Client assets grew to $1.854 trillion in the quarter, up 2.99% from last quarter and 7.10% from the same period last year. That was driven by asset flows into adviser-managed, long-term investment strategies, which increased 78.9% to $10.3 billion in the quarter. Merrill Lynch is the second of the top three wirehouses to report earnings. Wells Fargo Advisors, which ranks third, reported last week that asset-based fees, rather than transactions, also drove profits. Morgan Stanley Wealth Management, the largest firm by head count, will report its performance on Friday. (See: Wealth management helps drive Wells Fargo third quarter) Bank of America shares traded up 2.18% to $14.55 in afternoon trading. Bank of America Corp.'s wealth management division also includes the U.S. Trust private banking business.

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