Merrill Lynch is investing in technology and expanding its alternative investment and lending offerings to support its ambition of being a one-stop shop for clients, according to Merrill Lynch Wealth Management president Andy Sieg.
“We’ve talked over the years about the opportunity to live out our modern Merrill strategy, which at its core means being a one-stop shop for our clients, having [clients] look to their financial advisors as they always have for investment excellence but [also] to handle all the other needs across their financial life,” Sieg said Monday during a call with media after the release of the second-quarter earnings for its parent Bank of America.
Merrill had $4.5 billion in revenues in the second quarter, up 6% year-over-year, and net interest income of $1.3 billion, up 33% year-over-year, according to Sieg.
“These results are driven by our advisors who are doing a phenomenal job engaging clients when they need us most. Our advisors are helping clients keep tough headlines in perspective, reviewing their plans and ensuring they remain on track. In fact, 59% more financial planning reports were run in the second quarter versus a year ago,” Sieg said.
“Advisors are also helping clients to combat complex markets by simplifying their financial lives. They’re serving as a one-stop-shop for clients’ full financial picture, including banking and lending,” he added.
Merrill added 11,400 net new household clients in the first half of the year, five times the pace of the first half of 2016 or 2017, according to Sieg. Additionally, the average new client size is $1.7 million per household, up 18% year-over-year, he said.
‘More Efficient and Digitized’ Client Onboarding
Merrill is “moving to a much more efficient and digitized way of operating,” according to Sieg, who cited the firm’s Collaborative Onboarding Experience as an example.
COBE, which was launched last year, digitized client account opening and onboarding at Merrill, he said, adding that nearly a third of eligible client accounts were opened via COBE in the second quarter.
“Digitizing this process means that many accounts can open almost instantaneously, and we continue to invest in the platform by adding more account types and capabilities to drive adoption higher,” Sieg said.
This month, Merrill launched a new capability for COBE: real-time collaboration, which enables advisor teams to virtually collaborate with clients and prospects, making it easier to collect data and reducing phone calls and emails, Sieg said.
“This is a perfect example of how technology can be especially powerful in wealth management, leveraging digital and human support in a coordinated way,” he said.
Meanwhile, Merrill is expanding its alternative investment offerings and has hired more than 50 professionals for this purpose since late last year, according to Sieg.
Merrill’s alternative investment assets under management stood at $75 billion in the second quarter, up 36% year-over-year, and gross sales of alternatives were $5.5 billion, up 55% year-over-year, he said.
Next month, Merrill plans to launch the Private Market Opportunities Program, according to Sieg.
The program will connect BofA investment banking’s private company clients in need of capital with Merrill and Private Bank clients who have more than $50 million in assets and are looking for new private market investment opportunities, Sieg said. The program will also leverage relationships with private equity sponsors in Merrill’s alternative investments platform to find co-investing opportunities in private companies, he added.
“This is another example of delivering the entire enterprise’s capabilities for our clients, and this program brings together the capabilities of our institutional investment banking, capital markets and alternative investment teams to our wealth management advisors and clients in a coordinated and powerful way,” Sieg said.
Merrill also plans to bring additional lending capabilities to clients, according to Sieg. Merrill has three types of lending capabilities: securities-based, mortgages and high-net-worth, Sieg noted. Merrill is “still in the early innings” of bringing those HNW lending capabilities to clients, which would enable lending against collateral types including real estate, art and aircraft, he said.
Work-from-Office Culture, Experienced Advisors
While there may be “a reluctance in many industries to return to office and be back in the office,” that isn’t the case at Merrill, according to Sieg, who noted that “the apprentice model of learning is very powerful in the advisor business.”
“There’s a strong recognition that this is a work-from-office culture, and among young people that’s in part because they understand this is the most effective way to build their skills and to become better advisors,” Sieg said.
Merrill is focused on adding experienced advisors and “has no plans to trim headcount or restrain the pace of investment in the business,” according to Sieg.
Merrill had hired 93 experienced advisors in the second quarter, the most it’s added in a quarter since 2010, Sieg said, adding that the “pace of hiring will increase in the second half of the year.”
Do you have a news tip you’d like to share with FA-IQ? Email us at firstname.lastname@example.org.