Merrill closes 2021 with a host of new records, 1,200 fewer advisors

Merrill’s strong year helps Bank of America close 2021 with a slate of new records

January 19, 2022 6:33 PM

Bank of America’s wealth management business is once again giving the Wall Street giant plenty to celebrate heading into the new year.

The company reported $7 billion in net income in the fourth quarter, representing a 28% percent increase from the $5.5 billion reported a year ago, according to earnings statements released Wednesday morning.

And much like the two previous quarters, the bank’s wealth unit provided a big boost to overall business by hitting new highs in revenue, client flows and client balances throughout 2021.

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“Wealth management had record client flows and the strongest client acquisition numbers since before the pandemic,” Bank of America Chairman and CEO Brian Moynihan said in a statement, noting that the company earned a record $32 billion in 2021 with every segment of its business contributing.

“Investment banking had its best year ever, and global markets had its highest sales and trading revenue in a decade, led by record equities performance as we invested in the business,” he said. “We also continued to support our communities, helping them address some of society’s biggest challenges, including the environment, the pandemic, racial equality and economic opportunity.”

A year of records

A flurry of “best-ever” figures highlight a strong 2021 for Merrill. The company reported record revenue of $17.4 billion, up 14% year-over-year, driven by record asset management fees, as well as the impact of loan and deposit growth.

Merrill client balances climbed to $3.2 trillion while AUM balances grew to $1.3 trillion, representing year-over-year increases of 14% and 17%, respectively.

The past 12 months also saw more wealth management clients buying into Bank of America’s full slate of services. Officials said nearly 55% of Merrill clients also took advantage of in-house deposit or lending options. Merrill clients opened approximately 123,000 checking and savings accounts in 2021, about 21,000 more accounts than they opened in 2020.

Advisor drain continues

Not all of the numbers related to wealth management are up. The number of advisors company-wide shrunk to 18,846 by the end of 2021, down from the 20,103 under the Bank of America banner at the end of 2020. Officials said advisor headcount is down 6% year-over-year because of an 18-month pause in hiring trainees during the pandemic and work being put into the establishment of a new advisor development program.

Historically, Merrill has hired about 2,000 advisors into its training program each year, according to the company. The new advisor development program launched in June and 1,000 trainees have entered.

The company reports that attrition among experienced Merrill advisors dropped below the firm’s historical average of 4% in the third quarter, and dropped even further to 3.1% in the fourth quarter. Bank of America leaders anticipate low single-digit growth in advisor population annually over the next five years, driven by the hiring and increased success rate of advisor trainees.

Embracing the digital future

As the pandemic continues to make face-to-face client meetings a thing of the past, the company experienced strong growth and expanded its presence through digital platforms in 2021. Nearly 80% of Merrill Lynch clients are actively using Merrill and Bank of America’s online or mobile platforms, and more than 400,000 digital meetings were hosted by advisors in 2021, up from just 71,000 in 2019. The pivot pushed Merrill into 23,300 new households in 2021, a 6% year-over-year increase.

Closing strong

According to Bank of America CFO Alastair Borthwick, the company was able to end the year on a strong note and hopes to carry that momentum forward. He said the bank’s revenue rose faster than expenses, resulting in a second consecutive quarter of year-over-year positive operating leverage.

“Also, we significantly grew loans and deposits, which allowed us to increase net interest income by $1.2 billion versus the year-ago quarter despite a challenging rate environment,” Borthwick said. “In addition, our investment banking and wealth management businesses continued to benefit from robust markets and the strong relationships we have built with our clients over many years.”

Borthwick added that asset quality remained strong with historically low loss rates and a rebounding economy that allowed them to release $851 million in reserves.