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Headcount and Production Both Rise at Merrill

October 17, 2014

Merrill Lynch managed to add advisors in the second quarter while also raising per-broker productivity, parent company Bank of America said in announcing third quarter earnings this week. According to On Wall Street, FA headcount at Merrill reached 14,000, with each soul producing $1.07 million, up from $1 million in third quarter 2013.

On the earnings call, CFO Bruce Thompson attributed the increases in part to better retention of the firm’s “more experienced advisors.” But, as Aite Group analyst Alois Pirker tells On Wall Street, the numbers also mean Merrill is hiring high-producing FAs.

Headcount had been sagging at the firm, says InvestmentNews, and it’s still below where it was this time last year. For comparison, Wells Fargo Advisors, which also announced results this week, reported broker headcount of 15,163; as of last quarter, Morgan Stanley had more than 16,300 advisors.

But the only other firm whose advisors average more than $1 million in annual revenues, according to IN, is the U.S. wealth management unit of UBS, which has not yet announced third quarter earnings. Overall, Merrill Lynch’s global wealth unit, which includes U.S. Trust, turned in net income of $813 million on revenues of $4.7 billion in the quarter. Its pretax profit margin of 27.4% is among the highest of the wirehouses’, says the newspaper.

Client assets are moving steadily onto Merrill Lynch One, reports The Wall Street Journal. Merrill FAs don’t have a choice about this — the firm has decreed that all accounts be transitioned to the new technology platform, launched in September 2013 to supplant five disparate systems, by the end of 2015. However, “Merrill is seeing an additional 25 cents in new money for every dollar moved” to Merrill Lynch One, says the Journal. B of A reports $157 billion in assets are now on the platform, $37 billion of which represent new money from old clients.

Despite the quarter’s good news, unhappy Merrill advisors continue writing and calling in to AdvisorHUB, which publishes their complaints anonymously. According to the website, brokers nostalgic for pre-Bank of America culture are agitating for a Merrill spin-off next year. “2015 is a very specific time frame to push for a spin-off, as the retention deals sunset and all clients must be repapered for inclusion onto the Merrill One platform,” one advisor is quoted as saying. “If it doesn’t happen in the next 12 months, Merrill Lynch will fade away.”

Of course, as AdvisorHUB notes, the bank isn’t likely even to consider such a transaction just to please its financial advisors. And the better they perform, the more their owner will want to keep them.

By Joan Warner
  • To read the Wall Street Journal article cited in this story, click here if you have a paid subscription.
  • To read the InvestmentNews article cited in this story, click here.
  • To read the On Wall Street article cited in this story, click here (free registration required).