Merrill Lynch targets affluent Florida clients as wealth management cushions disappointing quarter at parent Bank of America

Wealth management is a silver lining at Bank of America.

The Wall Street Giant reported second-quarter profit of $ 9.2 billion, up from $ 3.5 billion a year earlier. The huge increase is in part due to the bank unlocking more than $ 2 billion it hid in anticipation of bad loan coverage from the COVID-19 pandemic. Still, total revenue disappointed analysts, falling to $ 21.5 billion, down 4% from $ 22.3 billion a year ago. Low interest rates weighed on interest income and trading income fell.

The wealth management front was another story. The country’s No.2 bank in terms of assets posted strong revenue growth, with record fees for assets under management (AUM) and customer balances from April to June.

Large takeaway meals:

• Money Flows in Thanks to Strong Markets and New Client Assets: In the first half of 2021, a record $ 71 billion in new money entered by Global Wealth and Investment Management (comprising its main division Merrill Lynch, BofA’s Private Bank and Consumer Investments), surpassing the flows of 2019 and 2020 in half the time. The three units now have $ 4.1 trillion in customer balances.
• Total assets under management for the three units reached $ 1.5 trillion in the second quarter of 2021, up 27% from a year ago.
• Asset management fees rose 27% to nearly $ 3.1 billion, from nearly $ 2.5 billion a year ago. But compared to $ 3 billion in the first quarter of 2021, growth in the most recent quarter was much lower.
• Brokerage fees fell to $ 967 million from just over $ 1 billion in the first quarter. They were $ 939 million a year ago.
• Advisor workforce fell slightly, but the bank expects hiring to pick up in the second half of 2021.
• The bank pushes strongly in the rich Florida market.

Unless otherwise indicated, figures are for the second quarter of 2021:

Merrill Lynch Wealth Management:

• Strong stock markets were good for business. Client assets under management increased 29% to $ 1.2 trillion, a record from a year ago.
• Growth in costs of assets under management, deposits and loans contributed to overall income. Revenue increased 16% year-on-year to a record $ 4.3 billion.
• 6,000 new net household customers, up 4% from levels a year ago; 12,400 households so far this year; a new record household size of $ 1.4 million.
• 79% of customers use the mobile or online services, compared to 77% at the end of 2020.

Bank of America Private Bank:

• Customer balances rose 21% from last year’s levels to a record $ 580 billion.
• AT M balances increased 22% from levels a year ago to reach 340 billion dollars.
• 475 net new customer relationships, like a year ago; 1,140 new net customer relationships since the start of the year.
• 81% of customers use the bank’s mobile or online services, a record.

Heritage advisors:

• Advisor headcount decreased by 2% in the first quarter due to the slowdown in hiring that began last year. A spokesperson for the bank said that “we anticipate an acceleration of these recruitments during the second half of the yearAmid “costly competitive hires” in the battle for advisor talent.
• The total number of advisers across Merrill Lynch, Bank of America’s Private Bank and the Consumer Investments unit declined slightly to 19,385 in the second quarter from 19,808 in the first quarter. The bank had 20,622 advisers a year ago.
• 93% of Merrill advisers are on track to beat last year’s results, while 82% are on course to have their best year ever.
• Merrill Lynch pushes aggressively in Florida’s ultra-high net worth market, where it has 26 teams, up 40% from 19 teams at the start of the year. He aims to have 40 teams in Florida in the coming years.
• The advisers were “particularly successful in attracting very wealthy clients in the first half of the year ”, and have added more than 300 so far this year, a 60% increase from a year ago.
• “We remain committed to organic growth of our advisors and private client sales force as a stronger and more sustainable long-term strategy, ”CFO Paul Donofrio said on a earnings conference call on Wednesday.

Technology:

• The bank focuses on digital engagement, deeper interactions with customers and modernization of its technological platform for advisors and clients to enable “secure and easy collaboration”.
• The technology fuels deeper engagement between advisors and clients through Erica, an AI-powered virtual financial assistant, WebEx meetings, and secure text messaging.
• “Our aspiration is simply to follow and push customers at the same time, ”said CEO Brian Moynihan, according to a call for results transcription.