Merrill adds new clients by tapping Bank of America customers

'In 2023, a record number of existing Bank of America clients became Merrill clients,' says Eric Schimpf, president and co-head of Merrill Wealth Management. 'We can and will do more here.'

Merrill Lynch Wealth Management acquired a record number of new clients last year, thanks in large part to signing up customers from other parts of its parent, Bank of America.

Merrill Wealth Management and the Bank of America Private Bank added approximately 40,000 net new households in 2023, a 47% increase compared to 2022, with the wealth management arm accounting for 37,500, the firm said Friday in a conference call with reporters.

The total new client acquisitions were more than the previous full-year record in 2019. Merrill and the private bank brought in 7,000 new households in the fourth quarter.

The affluence of new clients increased as well, Eric Schimpf, president and co-head of Merrill Wealth Management, told reporters on the earnings call. Merrill doubled the number of net new households with more than $1 million in assets, and those with more than $10 million rose by 63%.

“Externally, there’s tremendous wealth creation and transfer of wealth underway in our country, coupled with increased complexity that is driving demand for personalized advice,” Schimpf said.

The new Merrill clients often already have a relationship with Bank of America through a checking account, self-directed investment account, retirement plan or an institutional account.

“There is a tremendous opportunity to grow, and we’re just scratching the surface,” Schimpf said. “In 2023, a record number of existing Bank of America clients became Merrill clients. We can and will do more here.”

The approximately 2,000 people in Merrill’s advisor training program are playing an important role in the flow of new clients from BofA.

“Our trainees, in particular, have been successful at cultivating these relationships,” Schimpf said. “Trainees acquired nearly twice as many new clients in 2023 as in the prior year. We offer the opportunity for our trainees to work across the entire wealth continuum and across the entire enterprise.”

Merrill Wealth Management and the BofA Private Bank generated $21.1 billion in net revenue last year, which was down 3% from 2022 because of lower net interest income and market levels, the firm said. Net interest income for the fiscal year totaled $7.1 billlion.

The three Bank of America wealth operations – wealth management, private bank and consumer investments – realized an inflow of $84 billion in assets under management over the past four quarters.

Merrill’s fee-based advisory platform garnered $38 billion in AUM inflows in 2023, which was five times the level gained in 2022, said Lindsay Hans, president and co-head of Merrill Wealth Management. She attributed the gains to the increase in new clients as well as “money coming off the sidelines” that was previously housed in cash alternatives on the brokerage platform.

“Our advisors and specialists are actively having conversations with clients with clients about the risk of avoiding risk,” she said.

The number of Merrill advisors increased by 175 in 2023, Hans said. Bank of America reported a total of 18,916 advisors “across the wealth continuum,” which was down 2% year-over-year.

“We remain committed to our organic growth strategy of training and developing the next generation of advisors and, of course, supporting our existing core experienced advisors in their growth,” she said. “And, as we have shared, we are doing select hiring of experienced advisors to help meet the growing demand for financial advice.”

When asked by a reporter about advisor attrition, Schimpf declined to provide a specific statistic.

“Attrition among our Merrill advisors for the year, I would say, is right in line with historical averages, but we have definitely seen some very encouraging trends toward the end of 2023, especially in the fourth quarter,” he said.

Merrill’s strategy for the year ahead focuses on “being a client’s primary provider across investments, lending and banking,” continuing to attract new clients, and training and hiring more advisors “to serve the wealth creation opportunity in the marketplace,” Hans said.