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Client Asset Flows Up at BofA as Advisor Ranks Thin

Client Asset Flows Up at BofA as Advisor Ranks Thin

Bank of America’s global wealth & investment management unit on Wednesday reported record-setting quarter in assets under management and fees earned, even as advisor headcount and productivity dipped.

The firm took in a total of $13.3 billion in new assets during the third quarter, up from $7 billion from the previous quarter. The unit reported a total of $779.6 billion in client assets under management, compared to $693 billion a year ago. The division also hit a post-merger record in the number of reported asset management fees, which were at $1.7 billion, up 13 percent since the third quarter 2012.

Bank of America's chief financial officer Bruce Thompson called the flows "solid," during the bank's earnings conference call Wednesday, saying he sees continued strength in the firm's global wealth management business.

But these achievements came amid shrinking advisor headcounts. In the last year, BofA’s global wealth & investment management group cut its advisor ranks by 7 percent, dropping from 16,759 in 2012 to 15,624 during the third quarter of 2013. Even quarter-to-quarter the unit lost 135 advisors since July. 

Looking specifically at the brokerage business, Merrill Lynch ended the quarter with 14,039 financial advisors, down 133 brokers from the end of the second quarter. The loss is a result of continued attrition of off-target and pre-production trainees with Merrill’s practice management development program, a firm spokeswoman says.

This continued advisor decline may be affecting productivity in the overall unit, which decreased slightly in the third quarter by 1 percent after seeing several quarters of consecutive growth. Compared to June's $1.012 million per advisor in productivity, the global wealth & investment management division reported total advisor productivity at $1 million on Wednesday, while experienced advisors (those not in the bank's training program) reported $1.3 million. Year over year, total advisor productivity has increased by over 11 percent. 

Overall, the bank reported solid growth during the third quarter, with profits rising to $2.5 billion versus $340 million reported a year earlier, when BofA experienced heavy litigation costs and other expenses. And although revenue did not beat estimates, it increased by 5.4 percent to $21.7 billion, up $1.1 billion from the $20.6 billion reported a year ago.

Revenue within Merrill Lynch experienced similar declines, falling 2.6 percent from the second quarter. But the $3.6 billion reported this quarter was still up 6.6 percent from a year earlier when revenue was $3.4 billion. The slight decrease was attributed to reduced market activity and seasonality, a firm spokeswoman said in an email.

More broadly, the global wealth & investment management unit eared a $719 million profit in the third quarter, coming in behind BofA’s consumer banking division’s $1.8 billion and the corporate banking and investment banking unit’s $1.1 billion profit.

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