Welcome to Financial Advisor IQ

Merrill and Morgan Stanley File Strong Earnings

By Alex Padalka April 19, 2017

Bank of America’s wealth management division had record flows in long-term assets under management in the first quarter this year, in part because many of its retirement clients moved brokerage-based assets into managed accounts, the company says in a statement.

The bank’s Global Wealth & Investment Management unit, which includes Merrill Lynch Wealth Management and U.S. Trust, posted $770 million in net income in the first quarter of this year – a 4% rise over the first quarter of 2017, Bank of America says. Revenue was also up 3% year-on-year to $4.6 billion. At Merrill Lynch, revenue was up 5% from the last quarter of 2016 and up 3% year-on-year, the bank says.

In the first three months of 2017, long-term assets under management flows in the wealth division overall reached $29.2 billion, according to the bank. In the previous quarter that figure was $18.9 billion, while in the first quarter of 2016 the firm had negative flows of $0.6 billion, Bank of America says.

The bank attributes the record asset flows in part to robust client activity as well as to IRA brokerage accounts switching over to fee-based accounts. Merrill Lynch said last year it would ban commission-based retirement accounts to help its brokers comply with the Department of Labor’s fiduciary rule, although the wirehouse is reviewing some cases in which clients may not be better off in a fee-based relationship. The rule, which purports to require retirement brokers to put clients’ interests first, was scheduled to go into effect April 10 but has been delayed by at least 60 days.


The wirehouse also had 70 more brokers in the first quarter compared to a year ago, bringing the total to 14,548, according to Bank of America.

But Merrill lost 89 advisors since the last quarter of 2016, the bank says. Last month, Merrill lost three advisor teams to Raymond James alone. It also lost five advisors to Morgan Stanley in February. But Merrill nabbed four Morgan Stanley advisors last month and a $288 million Morgan Stanley advisor this month.

Meantime, Morgan Stanley's wealth management units scored an 11% climb in revenue to $4.06 billion from $3.67 billion last year. Profit margins for the unit were 24%, up from 22% last quarter. Overall the firm's quarterly earnings rose 70% after a strong quarter for its trading and underwriting businesses, the company reports.