Merrill Lynch Wealth Management revenue hits record $4.6 billion in 2022 Q1 despite market turmoil

Merrill Lynch Wealth Management takes in record revenue despite choppy stock market

April 18, 2022 9:36 PM

Merrill Lynch Wealth Management attracted record revenue in the first quarter of 2022 even as the stock market struggled with inflation, rising interest rates that may continue to climb and geopolitical conflict.

Merrill said the increase was driven by higher asset management fees and strong growth in deposits and loans, which drove net interest income higher.

Client balances rose, the result of market gains and net inflows of money, according to Bank of America’s April 18 first quarter earnings report. The number of clients was also up. Merrill Lynch Wealth Management added thousands of households.

After his presentation, Andy Sieg, president of Merrill Lynch Wealth Management, took a number of questions about alternative investments and advisor headcount.

He said the firm has made a number of new hires in its alternative investment business. Client portfolios, said Sieg, have traditionally been underallocated to alternatives.

“Up until a few years ago, they were unwieldy, with operational concerns and barriers … but have moved far over the past five years to develop products that are suited to retail investors,” he said.

As for advisors, Sieg said total advisor headcount was down in the quarter year over year, and he attributed that to trainee headcount being down. He said there was an 18-month trainee hiring pause during the height of the pandemic, but said the firm is preparing to launch a new flagship advisor development program.

Scroll down to see the highlights of Merrill Lynch Wealth Management’s quarterly results.

Earnings, revenue jump at MLWM and Private Bank

Net income of $1.1 billion was up 28% from the 2021 quarter for MLWM and Private Bank. Record revenue of $5.5 billion was up 10%, as was the record take for MLWM alone, to $4.6 billion. But expenses were up, too, rising 4% to $4 billion in wealth management and Private Bank because of higher revenue-related incentives.

Client balances rise, AUM down

Client balances at MLWM of $3.1 trillion were up 7% from last year’s first quarter, spurred by net client flows and higher market valuations. AUM flows were down though, to $15.5 billion from $18.2 billion in last year’s first quarter and $21.6 billion in the fourth quarter, for MLWM and Private Bank.

Deposits and lending rise

Average deposits of $385 billion were up by $59 billion, or 18%, from the 2021 quarter. Average loans and leases of $211 billion were up by $22 billion, or 12%, sparked by residential mortgage lending and custom lending, as well as securities-based lending. The figures are for MLWM and Private Bank.

Alternative investments

Sieg said MLWM hired 50 more investment professionals in its alternative investments business, which he said would allow the firm to launch new funds “at a greater rate.” Alternative investment AUM in the quarter was $71.5 billion, up almost 40% from last year’s quarter, and almost double the 2019 Q1 level of about $38 billion.

Advisor development shrinks

At the moment, Sieg said, total advisor headcount is 18,600, down 1% from last year’s quarter. He said there are 2,000 advisors in the new training program and the legacy program at MLWM, but added that that total is down more than 1,000 from a year ago. He said a few years ago there were 3,500 trainees in the development program. Advisors seem to be delaying retirement plans, though. “We saw significantly fewer advisors move into our retirement program than we expected,” he said.