Bank of America Merrill Lynch's wealth management profits grew 4% despite a slight drop in adviser headcount, the wirehouse reported Tuesday.
The bank's Global Wealth & Investment Management unit, which includes Merrill Lynch and U.S. Trust, reported net income of $770 million for the first quarter. This is the first earnings results reported for the Merrill business since Andy Sieg took over as head of the unit from John Thiel in January.
Sieg recently
Some advisers who have left the firm in recent months said they departed because of Merrill's plans to cease offering commission-based retirement accounts as part of efforts to comply with the fiduciary rule.
The advisers oversaw nearly $900 million in combined AUM, and moved to Morgan Stanley, Raymond James and HighTower.
For its part, Merrill has said its policy is intended to benefit clients and is part of a long-term strategic shift in its business. Clients seeking commission-based retirement accounts also have options through Bank of America's other business lines, such as Merrill Edge.
The company reported record long-term AUM flows of $29.5 billion for the quarter, up from $18.9 billion for the year-ago period, which the bank attributed in part to clients shifting from brokerage IRAs to fee-based relationships.
Merrill also says that more advisers are shifting to fee-based business. Approximately two-thirds have 50% or more of their client assets under a fee-based relationship, up from one-third five years ago. That transition comes after the wirehouse said it would cease offering commission-based retirement accounts as part of its plan to comply with the fiduciary rule. The firm has since
Meanwhile, the Department of Labor has
Sales were mostly flat until 2020. Over the past four years though, they've nearly doubled.
An industry survey of 200 compliance officers showed that a mere 12% of respondents currently using AI said they also adopted an AI risk management framework; experts said advisory firms need an AI governance plan ASAP.
RECORD MARGINS
Merrill Lynch's client balances rose 8.5% year-over-year to $2.167 trillion. Revenue increased 3.1% to $3.782 billion.
The wirehouse's adviser productivity also rose, reaching $999,000 per Merrill Lynch FA, up from $960,000 from the previous quarter and $984,000 for the year-ago period.
U.S. Trust's revenue grew 4% to $809 million, the highest level since 2009, per the firm. The number of private client advisers increased by 14 from the prior quarter to 367.
Overall, Bank of America's wealth management business hit a record pre-tax margin of 27%, up from 26% for the year-ago period.
The company also said that referrals to and from the unit to other areas of Bank of America increased 25% year-over-year.
Revenue grew 4% to $4.592 billion, boosted in part by growth in net interest income, which rose to $1.56 billion from $1.513 billion.
