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5 Top Trends From Merrill's Q2 Results

By Jeff Berman

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Bank of America’s Merrill Wealth Management division reported several positive trends from the firm’s second quarter ended June 30 that, in a Tuesday conference call with reporters, the division’s two new co-heads largely credited to Merrill Wealth Management’s strategy and increased client growth.

Overall, BofA reported net income rose 19% to $7.4 billion, or 88 cents per diluted share, compared with $6.2 billion, or 73 cents per diluted share for Q2 2022. BofA revenue, net of interest expense, grew 11% to $25.2 billion.

But global wealth management income fell 15% to $978 million, and revenue fell 4% to $5.2 billion from a year ago, “driven by lower equity and fixed income market valuations,” the firm said.

Lindsay Hans and Eric Schimpf, who were named co-heads of Merrill Wealth Management in March, replacing Andy Sieg, provided reporters with several trends and updates during an earnings call with reporters.

Here are five top trends they cited on the call:

1. It was a strong quarter for advisor recruiting.

Merrill added 190 advisors in the second quarter, Schimpf told reporters. That boosted the total number of Merrill advisors to 19,099, which was up 4% year over year.

Schimpf declined to give a breakdown on where each of the new advisors came from, including from recruitment and Merrill’s training program. “But I will tell you we’re very proud [of] all of the ways … we bring new, experienced advisors into the firm,” he said.

2. The firm is seeing early success from its new training program.

Merrill is seeing strong initial signs from its new advisor training program, Schimpf said, adding it “will continue to be a primary way that we develop advisors.”

There are currently “over 2,000 advisors at some various stage of the training program today,” he added.

3. Merrill is going full speed ahead with its management restructuring.

One “critical priority during our first three months” as Merrill co-heads was “establishing our dual leadership team,” according to Schimpf.

“Lindsay and I continue to see this commitment to clients and growth firsthand,” he told reporters. “We’re seeing it firsthand as we’re out on the road meeting with our teammates, our advisors, our client associates, market executives and our specialists.”

So far, the two of them “have been in over 20 markets, from Los Angeles, Philadelphia, Palo Alto, Chicago, Atlanta, Miami, Detroit, and many others,” he noted. “And this has really proven to be valuable time and it’s helped us even further inform our thoughts around strategy.”

4. Merrill’s new strategy has three pillars.

“Pillar number one is that we will deliver more for our clients that will deepen,” Hans said. “Pillar number two is we’re going to increase our growth and investment in our advisors. And, number three, we’ve got to continue this pace at which we’re attracting new clients.”

5. Five trends will have a major impact on the U.S. wealth management sector.

Hans highlighted what she said are “five key trends” that Merrill thinks will “define and shape wealth management in this country going forward.”

The first is that the “pace of wealth creation in this country is not going to slow down,” she said.

Second, “we see technology playing an increasingly big role, especially for our high-net-worth clients, in terms of the way they interact with us.”

Third, she said: “As clients think about simplification, which matters a lot to them in this space, they think about not just investments; they think about banking too, and they think about the value of both of those solutions being delivered by their advisor and the advisor team.”

Fourth, “we think big teams are going to get bigger.”

And fifth: “As we think about financial services as an industry and all of the different doors that talent can walk through, we see wealth management being the primary door,” she said. “We see it as the destination of choice for talent, just given the growth and these trends and the innovation in this business.”

(Image: AP)

Jeff Berman

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