Merrill stops reporting advisor headcount; says the tally has lost meaning

Merrill has joined the ranks of big wirehouse firms no longer reporting official advisor headcounts.

Merrill's earnings results for the first quarter include no tally for advisors on staff, breaking from a reporting practice the Bank of America subsidiary had engaged in for years. Merrill said in an official statement that recent changes and trends in the industry have made headcount a less significant measure of the firm's performance.

"We will continue to grow our advisor force through our training program, selectively recruiting experienced advisors and retaining our existing advisors," according to the statement.

Merrill last reported its advisor headcount in January, when it said it had nearly 18,916 on its payroll. Executives have said the firm's rate of attrition — the percentage of the advisory staff that leaves in any given year — has hovered around 4%.

"Over the last two quarters, advisor attrition has remained below the historical average," according to the firm's statement.

Merrill isn't the first big wirehouse to stop reporting its advisor tallies. Morgan Stanley last reported its headcount in April 2021, when it had roughly 16,000 advisors on staff. And Wells Fargo last released its tally in early 2023, when it had around 12,000 advisors.

With nearly 19,000 on its payroll at the last public count, Merrill has easily one of the largest wealth management forces on Wall Street. But it has been stung by prominent departures in recent months. 

In January, for instance, an eight-member team managing roughly $1.6 billion in client assets near Chicago decamped from Merrill for its rival UBS Group. Merrill itself has sought to revive its recruiting efforts while also working to put more than 2,000 new recruits through an internal training program.

Skeptics, though, have questioned whether industry newcomers can really hope to replace the experienced and productive teams that are leaving. In Merrill's earnings call on Tuesday, firm executives continued to place emphasis not on how many advisors they've added but how many clients.

Lindsay Hans, co-head of Merrill Wealth Management, said the firm has added more than 150,000 net new client relationships in the past five years. That included 6,500 new relationships in the first quarter alone, she said.

"Many of these clients start as a retail or institutional relationship at Bank of America, and then they're introduced to us for their wealth management needs," Hans said. "In 2023, a record number of existing Bank of America clients became Merrill clients. And in the first quarter, we nearly doubled the new assets generated from inbound referrals from other parts of the company versus the prior year."

For more on Merrill's first quarter, scroll down.

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Revenues and profits

Bank of America's Global Wealth & Investment Management division, which includes Merrill and the firm's private bank, reported a quarterly record of $5.6 billion in revenue for the quarter. That was up 5% year over year.

The firm noted in an earnings presentation that the higher figure was owing to "12% higher asset management fees, due to higher market levels and strong AUM flows, partially offset by lower net interest income."

Of that revenue total, nearly $4.7 billion came from Merrill Wealth Management and $944 million from the firm's private bank, which mainly works with wealthy clients.

Merrill reported $1 billion in profits on that revenue. That figure was up nearly 10% year over year.

Assets

Merrill reported more than $3.3 trillion in assets under management for the quarter, a record for the firm and a figure up 13% year over year. The AUM number was bolstered in part by $25 billion in new asset flows in the first quarter, itself up 62% year over year.

Hans said a lot of the new money has been coming from the Bank of America side of the business.

"In 2023, a record number of existing Bank of America clients became Merrill clients, and in the first quarter, we nearly doubled the new assets generated from inbound referrals from other parts of the company versus the prior year," she said. "And we see a lot more opportunity."

Hans' fellow co-head of wealth management, Eric Schimpf, noted that more than half of Merrill's clients also have a relationship with Bank of America.

"If you add in clients with a lending solution, that population now exceeds 60%," he said. "And in some markets where we see a strong Bank of America presence, strong local leadership, we are seeing upwards of 70% penetration."

The private bank meanwhile reported nearly $633.7 billion under management in the quarter. That was up by 11% year over year.

Expenses

The Global Wealth & Investment Management division reported $4.3 billion in non-interest expenses in the first quarter. That figure, up 5% year over year, was "driven by revenue-related incentives," according to the earnings presentation.  

Remark

Hans said Merrill continues to see plenty of untapped potential in Bank of America customers. She noted the bank has 69 million retail clients, 6 million participants in retirement plans and 3 million customers using self-directed brokerage accounts.

"Many of these have the wealth and complexity to be served by a Merrill financial advisor," Hans said. "If we were to convert a third of those, of that subset, that really has the complexity … we'd double the business at Merrill."