Merrill Lynch reported this morning that its individually managed account business survived the events of Sept. 11 well, without lots of clients bailing out.
Redemption rates were about three-quarters of one percent through the end of September, according to Mike Feigeles, a senior manager in the firm’s managed assets group.
Of the 300,000 individually managed accounts at Merrill Lynch in early September, just 2,600 cashed out during the weeks after the Sept. 11 attack, Feigeles said at a “Bull Session” gathering for reporters at the firm’s offices on Fifth Avenue in Manhattan.
A Merrill broker in the Midwest says Merrill’s statistics sound valid: Just one of his managed money clients made a drastic change after Sept. 11--moving from stocks to government bonds within his managed account.
“Frankly, I’ve had more volatility with mutual fund clients because of style drift,” says this producer.
Bob Dineen, head of Merrill’s asset management group, said during the Bull Session that the managed account business in general is enjoying an “incredible year” and that Merrill’s individually managed account business is outperforming the industry as a whole. Merrill has opened 101,000 new managed accounts this year, Dineen said. One out of every five Merrill clients with $1 million or more at the firm has at least one managed account. And 1,800 Merrill brokers who weren’t previously selling managed accounts started selling them this year.
Merrill offers managed accounts through programs called ML Consults and Strategic Portfolio Advisors (SPA). SPA offers clients with $25 million or more an array of almost 200 money managers (versus the 42 managers offered by ML Consults). The number of SPA accounts is growing at 30% to 40% annually, according to Feigeles.
The firm expects assets in individually managed accounts to more than double by midyear 2005, reaching $650 billion.
Next Monday, Merrill plans to unveil a new compensation plan for brokers that is expected to significantly increase the financial rewards brokers receive for selling managed accounts such as Consults.--Michael Hayes
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