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Record Asset Flows Boost Bank of America's Merrill Lynch Unit

Wealth Management was a bright spot in the bank's earnings, even as advisor headcount drops.

Merrill Lynch had a banner first quarter as a record amount of long-term assets flowed into the wealth management unit. 

Strong client activity and movement of IRA brokerage assets to managed accounts resulted in long-term AUM flows of $29.2 billion to Bank of America’s Global Wealth and Investment management (GWIM). The unit includes Merrill Lynch and U.S.Trust.

That inflow was well above both last quarter’s inflow ($18.9 billion) and the previous record of $20.4 billion set in the first quarter of 2013, according to a Merrill Lynch spokesperson.

Net income for the bank’s wealth management businesses was $770 million, up $30 million, or four percent compared to last quarter. Higher asset management fees and net interest income were credited for the growth and offsetting lower transactional revenue. Year-over-year brokerage and non-interest income was down $83 million from the first quarter of 2016 due to a “continued secular shift” as well as IRA assets moving to managed relationships.

Referrals to and from the GWIM segment also increased 25 percent from the first quarter in 2016, which is an important source of growth.

The Merrill Lynch herd thinned by 145 advisors during the first quarter of 2017 to a total of 14,484. But the broker/dealer gained 72 advisors year-over-year and intends on continuing to grow, a spokesperson said. The loss of advisors in the first quarter was attributed to seasonally low hiring and an expected increase in retirements. Merrill Lynch said “nearly all” of the retiring advisors participated in the b/d’s client transition program.

Advisor production improved last quarter as well. Total productivity, which includes all financial advisors, improved slightly to just under $1 million per advisor. The productivity of experienced Merrill Lynch advisors was $1.3 million.

U.S. Trust, which caters to high net worth and ultra high net worth clients and families across generations, also performed well for the bank in the first quarter of 2017.

The business line’s $418 billion in client assets under management was up $11 billion, or 2.8 percent from last quarter, and up $28 billion from last year.

Revenue for the unit was up 4.3 percent compared to last quarter to $809 million, the highest for the U.S. Trust since 2009. It also added 14 private client advisors in the first quarter and now has 376 across the country.

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