Merrill’s number of advisors is growing despite market volatility
Despite the turbulent market environment in 2022, Merrill Lynch Wealth Management has boosted its number of advisors year-on-year, with President Andy Sigg expecting the firm to continue to achieve advisor growth of an average of 3%-4% annually over the next decade.
According to the company’s fourth-quarter 2022 earnings report, Merrill added more than 800 advisors in the second half of last year, and the total number of employees was 19,273 at the end of the year, compared to 18,846 at the end of 2021 across “all wealth management businesses” in both. . Wealth and retail banking divisions.
In all, Merrill, which is part of Bank of America Merrill Lynch, saw record full-year revenue of $18.1 billion, up 4% year-over-year. It announced 25,000 new households last year, including a fourth-quarter record of 2,500, its strongest quarter since Q2 2019 and up 27% from the year-ago quarter.
While the company wouldn’t break down specific numbers for each division, Sieg said each division grew during the quarter. He said the company’s hiring strategy is based on their belief that we are in an “emerging market for advice,” and said growth in retail banking is largely based on its self-directed business and robo-adviser offerings.
“The growth I’m talking about, the 3-4% growth in advisors, a big part of that will happen in the Merrill business, given the size of Merrill’s business and the central role advisors play in serving high net worth and ultra high net worth clients, in particular.” You can overestimate the role the advisor plays.”
On an annual basis, assets under management fell from about $1.6 billion to $1.4 billion, with brokerage and other assets also declining from more than $1.6 billion to $1.4 billion. But even so, the wealth division boasted full-year records for both revenue and net income, which is an especially good result given negative returns in both the stock and bond markets, said Alistair Borthwick, chief financial officer for Bank of America.
“Volatility and lower market levels in general are putting pressure on certain returns in this business again in the fourth quarter, but what helps differentiate Merrill and the private bank is a broadly strong banking business with $3.24 billion in deposits and $224 billion in loans,” he said. , He said. . So despite the 14% decline in assets under management and brokerage fees year-over-year, we saw revenue stabilization with the fourth quarter of 2021.”
According to Sieg, attrition has remained relatively flat among advisors from previous years, and he said that despite the pause in hiring experienced advisors, he expected it to be a “somewhat more visible component” of the company’s growth strategy in 2023.
Advisor Headcount slips at Wells Fargo
Wells Fargo also reported earnings on Friday morning, as the company saw a similar decline in asset-based fees, “driven by a decline in market valuations,” the company said. This reduced non-interest income by $167 million to approximately $2.6 billion.
The firm’s total number of advisors decreased slightly from 12,367 at the end of 2021 to 12,027 at the end of last year.
Total revenue increased 1% year-over-year, with net interest income up 69% due to higher interest rates.
During a call detailing the results, Wells Fargo CEO Charles Scharf said the bank doesn’t expect a “sharp contraction” in the economy, though he said it nonetheless should be prepared for it. Calling 2022 “a turning point in the economic cycle,” he said the Fed has remained firm about raising rates to bring down inflation.
Although Scharf believes rising prices are starting to affect consumer spending, housing, credit and orders for goods and services, he said the impact on consumers and businesses is “manageable” so far.
“And while there will certainly be certain segments and consumers who will be more affected than others, the rate of impact that we’re seeing in our customer base is not materially accelerating,” he said.