Bank of America is enjoying significant growth in its Merrill Edge business and preparing to hire more bank-based advisors, according to a senior executive.
Merrill Edge’s client assets have grown by 32% year-over-year — or almost $90 billion in client assets — to $353 billion in 3.2 million accounts, according to Aron Levine, BofA’s president of preferred banking.
“We grow about 100,000 [accounts] a quarter,” Levine said last week at the BancAnalysts Association of Boston Conference.
“These are all strong accounts,” he said, noting that the average size of an account is $110,000, up from $60,000 five years ago.
Merrill Edge provides access to both online and advised investing, as well as trading, brokerage and banking services. It provides different services, such as Merrill Edge Self Directed, where users can trade exchange-traded funds and options, with no annual account fees or balance minimums, though options contract and other fees may apply.
More and more Merrill Lynch and private bank clients are looking for self-directed accounts, Levine said.
“We’re seeing a huge amount of hybrid business. Those are assets that used to go to Schwab, used to go to E*Trade, used to go elsewhere,” he said. “We’re now collecting assets from those clients and defending [them].”
“A private bank client that might have [a] $50 million total portfolio and wants to move $2 million, where once [it] would have gone to Schwab, we now capture that and keep it within the company,” he added.
Other Merrill Edge offerings include Merrill Guided Investing, which was launched in 2017 and provides services both online and with an advisor. Levine described Merrill Guided Investing as using a robo-advisor to provide digital advice, although he isn’t a fan of the term.
“We don’t like to use ‘robo’ because we use our Chief Investment Office to do all the actual portfolio management, but that offering has grown,” he said.
Merrill Guided Investing has about $25 billion in client assets in the managed model, “so that has been very effective for us,” Levine said.
Bank-Based FA Headcount
BofA is also growing its workforce of bank-based advisors, according to Levine.
“We created a role called the financial solution advisor, which 10 years ago was somewhat innovative in that it was an advisor with base salary and bonus, sitting in a financial center, part of the ecosystem of the financial center,” he said.
Those bank-based advisors have grown from about 150 to 200 at the start to the current 2,800, Levine said, adding BofA expects the headcount to rise to 3,000 next year.
“They help clients with life planning, with banking, lending and of course the investing,” Levine said. “[T]hat model allows us to give access to an advice model at a much lower sort of investment rate. Obviously, clients that have more wealth, more complexity, we refer those to Merrill Lynch and their private bank.”
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As an experienced financial analyst and enthusiast in the field of banking and investment, I've closely followed the developments within the financial sector, including the evolution and growth of services offered by prominent institutions like Bank of America (BofA). My expertise extends to analyzing market trends, investment strategies, and the integration of technology in financial services, all of which are relevant to the article discussing Merrill Edge's expansion and BofA's plans to hire more bank-based advisors.
The piece highlights several key concepts integral to understanding the growth and strategies employed by Merrill Edge and Bank of America:
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Merrill Edge's Growth: The article emphasizes Merrill Edge's remarkable growth, evidenced by a substantial increase in client assets by 32% year-over-year, totaling $353 billion across 3.2 million accounts. This signifies a substantial expansion in the clientele base and asset management within a specific time frame.
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Service Offerings: Merrill Edge provides a range of services, including online and advised investing, trading, brokerage, and banking services. These encompass different tiers, such as Merrill Edge Self Directed, offering trading features for exchange-traded funds and options, with specific fee structures.
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Client Preferences and Shifts: There's a noticeable shift in client preferences, with more Merrill Lynch and private bank clients seeking self-directed accounts. This change has resulted in the retention of assets that would have otherwise gone to competitors like Schwab or E*Trade.
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Merrill Guided Investing: This service, launched in 2017, offers a hybrid model utilizing both digital advice and human advisors, often referred to as a 'robo-advisor' model. However, the distinction lies in leveraging the expertise of the Chief Investment Office for portfolio management.
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Bank-Based Advisors: BofA has significantly increased its cadre of bank-based advisors known as financial solution advisors. These advisors operate within the financial center ecosystem, offering a combination of base salary and bonuses to assist clients with various financial needs, including life planning, banking, lending, and investment advice.
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Strategic Referral Model: The institution strategically directs clients with higher wealth and complexity to Merrill Lynch and their private bank, ensuring appropriate service alignment based on client needs.
This information underscores the comprehensive approach taken by Merrill Edge and Bank of America in catering to a diverse clientele, integrating technology with advisory services, and expanding their advisory workforce to meet the growing demands of their customer base.
