Merrill Lynch reported earnings of $1.3 billion for the first quarter of 2004, a 95 percent increase from the same period a year ago. Pretax earnings for the global private client group—Merrill’s brokerage unit—was $510 million. The profit margin increased to 20.4 percent, almost nine percentage points higher than the year-ago quarter.
Private client assets continued to increase after declining for three years, ending in the first quarter of 2003. The firm also continued to increase the number of total financial advisors, which had hit a trough in mid-2003. As of the first quarter, the firm had approximately 13,700 financial advisors, an increase of 224 for the quarter. U.S. private client assets rose to $1.187 trillion in the first quarter from $1.165 trillion at the end of the fourth quarter 2003.
“Turnover among first and second quintile financial advisors is probably at its lowest in four years,” said Ahmass Fakahany, executive vice president and chief financial officer at Merrill Lynch, on a conference call. “Flows into annuitized accounts were the highest since we started calculating that figure.”
Indeed, flows into fee-based accounts were $13 billion for the quarter, according to the firm; total assets in “asset-priced accounts” increased a net $11 billion for the quarter, to $235 billion from $226 billion in the fourth quarter of 2004.
The firm is continuing to try to capture a greater share of client assets through the Total Merrill program—covering as many aspects of a client’s financial life as possible. The firm just recently introduced a loan management account and will be debuting a credit card within the coming weeks.
It also recently rolled out several different tools for advisors to use, including financial planning modules, a model of asset allocation and an enhanced portfolio review for clients. It plans to roll out additional tools for financial advisors’ desktop workstations, which will include a wealth monitor that uses simulations to determine the likelihood of reaching certain financial goals.