Despite a turbulent market environment in 2022, Merrill Lynch Wealth Management boosted its advisor head count year over year, with President Andy Sieg predicting the firm would continue to see 3% to 4% advisor growth on average per year over the next decade.
According to the firm’s fourth quarter 2022 earnings report, Merrill added more than 800 advisors in the second half of last year, with total head count at 19,273 at year-end, compared with 18,846 at the end of 2021 across “all wealth management businesses” in both the wealth and consumer banking divisions.
In all, Merrill, which is part of Bank of America Merrill Lynch, saw a record full-year revenue totaling $18.1 billion, up 4% year over year. It reported 25,000 net new households last year, including a fourth quarter record of 2,500, its strongest quarter since the second quarter 2019 and a 27% increase from the year-ago quarter.
While the firm would not break out the specific head counts for each division, Sieg said each division had grown during the quarter. He said the firm’s recruiting strategy was based upon their belief that we’re in “bull market for advice,” and said the growth in consumer banking was largely predicated on its self-directed activity and robo advisor offerings.
“The growth I’m talking about, the 3% to 4% growth in advisors, a good deal of that will take place in the Merrill business, given the scale of the Merrill business and the central role that advisors play in serving high-net-worth and ultra-high-net-worth clients, in particular,” he said. “You just can’t overstate the role an advisor plays.”
Year over year, assets under management dropped from approximately $1.6 billion to $1.4 billion, with brokerage and other assets likewise dipping from more than $1.6 to $1.4 billion. But nevertheless, the wealth division boasted full-year records for both revenue and net income, a particularly good result considering negative returns in both equity and bond markets, said Alastair Borthwick, BofA’s chief financial officer.
“The volatility and generally lower market levels put pressure on certain revenues in this business again in Q4, but what helps differentiate Merrill and the private bank is a strong banking business at scale with $3.24 billion of deposits and $224 billion of loans,” he said. “So despite a 14% decline in assets under management and brokerage fees year over year, we saw revenues hold flat with the fourth quarter of 2021.”
According to Sieg, attrition remained relatively steady among advisors from previous years, and said that despite a temporary pause in experienced advisor hiring, he expected that to be a “somewhat more visible component” of the firm’s growth strategy in 2023.
Advisor Head Count Slips at Wells Fargo
Wells Fargo also reported its earnings Friday morning, with the firm seeing a similar decline in asset-based fees, “driven by a decrease in market valuations,” the firm said. That resulted in non-interest income declining $167 million to approximately $2.6 billion.
Total advisor head count at the company dipped slightly from 12,367 at the end of 2021 to 12,027 at the end of last year.
Revenue overall 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 was not projecting “a severe downturn” in the economy, though he said it must nevertheless be prepared for one. Calling 2022 a “turning point in the economic cycle,” he said that the Federal Reserve remained steadfast about raising rates to reduce inflation.
Though Scharf believed the rate hikes were beginning to impact consumer spending, housing, credit and demands for goods and services, he said the impact on the company’s consumers and businesses has been “manageable” thus far.
“And though there will certainly be certain segments and consumers that are more impacted than others, the rate of impact we see in our customer base is not materially accelerating,” he said.