Merrill Touts Success of Growth Strategy in Pandemic-Afflicted Year

Revenue at Merrill Lynch Wealth Management fell 5% in the final quarter of 2020 but results continued to improve from earlier in the year as client assets hit a record and net flows climbed back near Covid-19 pandemic-related disruptions.
Merrill brokers added 22,000 net new households for all of 2020, including 5,000 in the fourth quarter as brokers re-focused on prospecting in the back half of the year despite pandemic-related prohibitions on in-person meetings, the company said.
“Despite the virtual environment and inability to have face to face meetings—and inherently the wealth management business is a face-to-face business—household growth continued to accelerate in the second half of the year,” Bank of America Chief Executive Moynihan said on the company’s earnings call, noting it was a record year for new $10-million plus clients across the division.
The 22,000 new-household metric compared with 35,000 that brokers attracted in 2019 but was four times greater than brokers added in 2017 levels. To prod new accounts, Merrill introduction its carrot-and-stick “growth grid” in 2017 at the same time it halted veteran broker recruiting.
“It clearly underscores the way that the organic growth tempo of the business has increased,” a senior Merrill executive said in discussing the firm’s results. “Over the last three years alone, we have grown our business by a cumulative 85,000 net new households.”
The executive highlighted improvements in markets such as “Greater Detroit” and particularly the “Gulf States” in Alabama and North Florida where advisors added a net 640 households in 2020, up from just seven on a net basis in 2016.
That push, coupled with rising markets, lifted Merrill client balances 10% to a record $2.81 trillion–including assets under management and loans and deposits. Brokers added a net $7.6 billion in assets under management in the fourth quarter, below $8.1 billion in the fourth quarter of 2019 but well above $1.3 billion in the third quarter of 2020.
Overall, quarterly profit in the Global Wealth & Investment Management division was down 19% year-over-year to $836 million as expenses rose. Pretax profit margin fell to 24% from 28% in the fourth quarter of 2019 but improved from 22% in the 2020 third quarter.
The total number of advisors at Merrill and Bank of America’s mass-affluent Merrill Edge unit fell by a net 429, or 2.5%, to 17,331 over the last three months and was down slightly from 17,458 year-over-year. (Merrill since 2019 has not broken out the number of core wealth brokers from roughly 3,000 in the Edge unit.)
But the Merrill executive attributed departures to peripatetic brokers, noting that four out of five of those departures had been previously recruited to Merrill from other firms.
“In other words, those advisors who had departed now have three or more firms on their résumés,” the executive said. “This dynamic reaffirms for us the commitment to organically growing our advisors and helping them to achieve long-term career success at Merrill.”
Merrill’s attrition rate also improved slightly from 2019 to just under 4% last year, and the goal is to see low single-digit growth in the advisor count annually primarily driven by its in-house training programs, the executive said.
The ranks of top performers at Merrill expanded last year as 3,800 advisors achieved more than $1 million or more in total revenue for 2020, slightly above the 3,700 who hit that mark in 2019. Over 700 generated $2.5 million or more in commissions.
Firm-wide average revenue per advisor rose 5% to $1.170 million from $1.108 million a year ago and was up from $1.125 million in the third quarter, the company said.
Brokers also continued to sell the Bank of America franchise, opening 107,000 bank accounts for wealth customers last year. Referrals between Merrill brokers and bankers rose 9% in 2020. Average deposits from market-wary wealth clients grew 20% from a year ago to $306 billion during the quarter, and average loans jumped 7% to $187 billion.
Merrill has also “significantly increased” the number of wealth management bankers helping advisors pitch clients on Bank of America products and now has 500 assigned to wealth branches across the country, up from 300 mid-2020. The firm also in September introduced a new Advisor Development program to train wealth management brokers from within Bank of America.
The senior executive confirmed that Merrill is maintaining its pause in cold calling in its training program and is rolling out a new prospecting strategy in coming weeks that will largely do away with the practice, the senior executive said. The firm suspended trainee cold calling earlier last year after finding some do-not-call policy violations by neophyte brokers working from home.
“We are going to be in position to very successfully develop new advisors with far less reliance on cold prospecting via phone calls,” the executive said.
I guess Advisor Hub has been lying the last several years in their reporting of the countless longtime and/or lifetime FA’s leaving Merrill. The fact is that a very high number of FA’s start their young careers at a bank, insurance company, or small brokerage before switching to a major brokerage such as Merrill or MS when they become successful.. Once again Merrill/BAC is spinning statistics to mislead and show something that’s simply not true. They want you to pay no attention to your eyes and common sense to see what’s really happening. Your eyes and Advisor Hub reporting is not lying -there’s been a total wave of experienced, successful advisors leaving Merrill!
There are so many successful Merrill teams. So many men and women that have started with nothing that have become multi millionaires.
The top 2500 people currently employed at this firm that are making over 500,000 a year. And the top 500 are making over 1.5 million. The the medium person that is at the firm over 10 years makes 350,000. There are over 300 advisors at the firm that manage over a billion dollars on assets.
46 percent of all Merill advisors had there best year last year on top of having there best year the year before.
211 advisors over the age of 55 with an average length of service of 23 year took a retirement package. That retirement package had a medium pay out of over 2 million dollars . And 181teams across the firm got those assets and will continue to share on those fees that the clients pay.
Less than 3 percent of advisors left the firm last year. The medium new account opened at the firm was over a million dollars.
Merrill has been incredible opportunity to so many people. My sincere advice to those that are getting in this career is too keep your head down follow the firms leadership and when you pick you heads up you 10 years down the road you will have helped so many people and created wealth beyond your expectations.
Wishing everyone a wonderful 2021
Please share your personal success story. Let’s focus on the positive.
Well said, Andy.
Pretty sure you would also have me believe that Trump did nothing wrong a few Wednesday’s ago.
When is salary + bonus coming?
This is either sarcastic, or Andy is writing under pseudonyms
let me get this straight…..new accounts are up, client balances are up, attrition at an all time low, anyone who left is a jumper(biggest lie, ITS NOT 80%), and yet proftis are down 19%???? How is that “responsible growth”? The lies continue, but the most senior executives are on to this leadership teams “messaging”. Two things, Merrill will have new leadership by Thanksgiving, most people in the know are aware, and as far as “peripatetic brokers”, isn’t Andy one himself? Look at his Broker Check, and he has been at 3 firms himself. Btw, When did you know these “peripatetic” advisors were bad? while they were there, or after they left? See where i am going with this?
What goes around comes back around….
“But the Merrill executive attributed departures to peripatetic brokers, noting that four out of five of those departures had been previously recruited to Merrill from other firms”.
But its was ok when Merrill recruited those FA’s with 3 or more firms on their resume….
“In other words, those advisors who had departed now have three or more firms on their résumés,” the executive said”.
Hypocrites.
.
Andy’s has to “tout” something to just his multimillion dollar salary in the face of plummeting earnings snd sky high attrition of successful advisors. Let’s see how he stacks up against James Gorman when MS announces earnings tomorrow, Want to make a bet?
To Dread Pirate Roberts,
You can make that money and not deal with the corp mess if you want. You could not pay me $1mil a year extra to walk back into a wirehouse. Waste so much time with their games.
Where does 14k FA’s come from? We ended last year with 10.9k and now our system shows 12.2k, the numbers are being gamed to paint a rosy picture. Morale is at an all time low. They hired a BAC manager to run the training program and destroyed it by prioritizing activity over results (they tried to mirror bank goals). There is no real vision that FA’s are buying into, we understand it’s them vs us and our clients.
If the S and P was up 13 percent last year and the Barclays Agh was up 6 but your balances in the investment realm are up 5%, what strategies are you implementing and why would you tout being up 5 % in client assets?
Math wiz – The S&P was up 18% in 2020
I have Not received ONE phone call from my Managing Director in 9 months WFH
Easy to explain. He doesn’t even know who you are.
You must be doing everything right!
The article states “Over 700 generated $2.5 million or more in commissions”. That’s sick. $2.5 million in commissions? If you earn a commission, then you are a salesperson.
We live in a world of sales get over it. Every internet ad, every visit to the dentist or dr. Fee for service is just a fancy way to say perpetual commission. It’s capitalism, without sales the world would look a lot different.
That’s the difference between you and me. I’m a fiduciary and put my clients needs first and foremost. I earn a fee and am not compensated by a transaction. The sales process has been taken out of the equation. You on the other hand, are moving your clients money back and forth trying generating your gross production every month. Do you pitch your clients to sell CVX to buy XOM?
Just curious, are you saying that at NO point a sale takes place? I find that hard to believe. I do believe that your recommendations are without bias, but anytime you recommend a trade that is a sale. As they say in the movies, either you sold them on why they should or they sold you on why they won’t.
You obviously don’t understand the fee side. As an RIA, I NEVER discuss a trade with a client. I have complete discretion over everything. And my fee is a tiny fraction of the value of the account. And I keep 100% of that tiny fee, I share none of it with a Broker/Dealer. What’s so obvious is that you wire people have zero understanding of how the RIA side operates.
I am not a wire person, I own an independent practice.. How do you not discuss a trade with a client. Do you not do reviews? do you not own mistakes? Just something along the lines of: You made X. That is it? Clearly I do not understand your interpretation of the RIA model.
Michelle, if he’s like most of us, he’s probably “both”. Not every client belongs in a fee based account, nor does every client belong in a commission based account.
Wrong. Every client belongs in a fee based account. Whether it’s a charge as a percentage of assets under management or whether it’s an hourly fee for services, commissions belong in the car industry, not in financial services. Of course those of you on the wire side are slaves to your masters and have no say in the compensation model. Have fun in Hell!
Fess up, you drank the cool aid didn’t you?
And you’ll be glad to know that there’s a spot in hell right next to me, reserved just for you.
“Wrong. Every client belongs in a fee based account.”
Sorry you couldn’t pass the Series 7, 9 &10, or 24. Looks like you have no choice except fee based!
You’re funny.
As others have said, the math at BofA/ML just doesn’t add up. Every quarter I await the spin. So glad i left, and i was not a peripatetic broker but rather a lifer….the key word being “was.” I am so glad I am out of the there. Client satisfaction, NAA, production, all metrics are up. There is life after “Merrill.”
Glad you caught the humor in my posts. We can always agree to disagree without the harshness. I hope you have a great day.
our team left ML after 15+ years, better said ML left us since the Bank trained its eye on GWIM when John Theil “retired” and the bank’s corporate hand picked assassin Andrew Sieg stepped in, summarily fired his brother and began to remake the business in Brian’s image.
BM sees the wealth business and questions why is the pre tax margin of ML not in line with Edge and UST? after all the advisors do the same job, i.e. work with individual investor
Beginners(Edge) Mass Affluent(ML) UHNW (UST PCA’s and ML Private Wealth). Profit differential is about 20%-30% higher in Edge and UST.
SO the plan retire out legacy FA’s where the inheriting advisors will have a difficult time soliciting them if they ever leave, cut hiring new advisors, create a growth grid to drive up margins and finally continue to hire FSA’s who today number close to 30% of the advisor force in GWIM(estimate from a senior Edge exec).
A few comments for those that remain
1-Credit and Lending is BAML strongest card
2-Investment Platform is not any longer and until you try the red pill you are condemned to see the blue pill platform as best in class. ITS NOT
3-Lack of a buy side business aka a top notch asset firm think GSAM, JPM and MSIM leaves advisors who are not as market savvy listening to allocators like Hizy who could never run money on his own
You can still make a lot of money at BAML, I left as a million dollar ++ producer but I can tell you our team has never been happier. Clients supported our move with the exception of a handful and we left some revenue behind.
Happy 2021
This is awesome Happily – I am so glad you all pulled the cord! Wishing the best to you guys and here’s to a great 2021!
PS. Hands down to the PR team of Merrill/BofA – They are really earning that retainer with this beautiful fairytale! My eyeballs almost rolled out of my face and down the block after reading this – But, keep up the good work guys, it looks like one person in this comment section actual believes this BS….