Regardless of a turbulent market surroundings in 2022, Merrill Lynch Wealth Administration boosted its advisor headcount year-over-year, with President Andy Sieg predicting the agency would proceed to see 3%-4% advisor development on common per yr over the subsequent decade.
In accordance with the agency’s fourth quarter 2022 earnings report, Merrill added greater than 800 advisors within the second half of final yr, with whole headcount at 19,273 at yr finish, in comparison with 18,846 on the finish of 2021 throughout “all wealth administration companies” in each the wealth and shopper banking divisions.
In all, Merrill, which is a part of Financial institution of America Merrill Lynch, noticed a file full yr income totaling $18.1 billion, up 4% year-over-year. It reported 25,000 internet new households final yr, together with a fourth quarter file of two,500, its strongest quarter because the second quarter 2019 and a 27% enhance from the year-ago quarter.
Whereas the agency wouldn’t get away the particular headcounts for every division, Sieg mentioned every division had grown throughout the quarter. He mentioned the agency’s recruiting technique was based mostly upon their perception that we’re in “bull marketplace for recommendation,” and mentioned the expansion in shopper banking was largely predicated on its self-directed exercise and robo advisor choices.
“The expansion I’m speaking about, the 3-4% development in advisors, a great deal of that can happen within the Merrill enterprise, given the dimensions of the Merrill enterprise and the central function that advisors play in serving excessive internet price and extremely excessive internet price shoppers, specifically,” he mentioned. “You simply can’t overstate the function an advisor performs.”
Yr over yr, belongings underneath administration dropped from roughly $1.6 billion to $1.4 billion, with brokerage and different belongings likewise dipping from greater than $1.6 to $1.4 billion. However nonetheless, the wealth division boasted full-year information for each income and internet revenue, a very good outcome contemplating detrimental returns in each fairness and bond markets, mentioned Alastair Borthwick, BofA’s chief monetary officer.
“The volatility and customarily decrease market ranges put strain on sure revenues on this enterprise once more in This autumn, however what helps differentiate Merrill and the non-public financial institution is a powerful banking enterprise at scale with $3.24 billion of deposits and $224 billion of loans,” he mentioned. “So regardless of a 14% decline in belongings underneath administration and brokerage charges year-over-year, we noticed revenues maintain flat with the fourth quarter of 2021.”
In accordance with Sieg, attrition remained comparatively regular amongst advisors from earlier years, and mentioned that regardless of a short lived pause in skilled advisor hiring, he anticipated that to be a “considerably extra seen part” of the agency’s development technique in 2023.
Advisor Headcount Slips at Wells Fargo
Wells Fargo additionally reported its earnings Friday morning, with the agency seeing the same decline in asset-based charges, “pushed by a lower in market valuations,” the agency mentioned. That resulted in non-interest revenue declining $167 million to roughly $2.6 billion.
Whole advisor headcount on the firm dipped barely from 12,367 on the finish of 2021 to 12,027 on the finish of final yr.
Income general elevated 1% year-over-year, with internet curiosity revenue up 69% resulting from larger rates of interest.
Throughout a name detailing the outcomes, Wells Fargo CEO Charles Scharf mentioned the financial institution was not projecting “a extreme downturn” within the economic system, although he mentioned it should nonetheless be ready for one. Calling 2022 a “turning level within the financial cycle,” he mentioned that the Federal Reserve remained steadfast about elevating charges to cut back inflation.
Although Scharf believed the speed hikes had been starting to impression shopper spending, housing, credit score and calls for for items and providers, he mentioned the impression on the corporate’s shoppers and companies has been “manageable” so far.
“And although there will definitely make certain segments and shoppers which might be extra impacted than others, the speed of impression we see in our buyer base just isn’t materially accelerating,” he mentioned.