Merrill Lynch Wealth Administration added virtually 4,800 internet new shoppers within the third quarter, staying “comparatively constant” to earlier intervals and a passable outcome “given the quieter summer time months,” stated Merrill Co-President and Co-Head Lindsay Hans, throughout a wealth-specific third-quarter earnings name.
Nonetheless, the agency noticed a substantial change within the affluence of latest shoppers, which Merrill thought-about a core a part of its development technique.
“Extra particularly, new shoppers with over $500,000 make up a bigger share of our development, and the variety of internet new $10 million+ shoppers doubled within the quarter versus the identical interval final yr,” Hans stated.
The common deposits in Financial institution of America’s World Wealth and Funding Administration division dropped to $280 billion, down 4% from a yr in the past and three.6% from the earlier quarter.
However the agency’s complete shopper balances in wealth (together with BofA retail, Merrill Wealth Administration and Personal Financial institution shoppers’ investments, deposits and loans) hit a report excessive of $5.9 trillion, together with $3.5 trillion in Merrill Wealth, an 18% year-over-year improve, in line with the agency’s third-quarter earnings.
Merrill Lynch and the Personal Financial institution posted $5.8 billion in income, up 8% year-over-year, which the agency attributed to larger asset administration charges based mostly on larger market ranges and robust AUM flows. Payment-based flows had been roughly $61 billion year-to-date, a 32% year-over-year leap, pushed by new shopper acquisitions and “advisors working with the prevailing shoppers to reinvest belongings.”
The earnings are the primary for the reason that Federal Reserve minimize charges by 50 foundation factors in late September, with extra cuts attainable later this yr. Earlier this yr, BofA additionally opted to boost the quantity it paid on financial institution and sweep deposits for the primary time in a number of years.
Merrill Wealth Co-Head and Co-President Eric Schimpf stated the agency couldn’t make “forward-looking” statements about how charges might change sooner or later in addition to committing to “value in line” with markets, together with money options and cash market funds.
“As everyone is aware of, we made a number of modifications to our pricing in lieu of the rate of interest setting, and we did that earlier this yr,” he stated. “And we’ll proceed to try this, and we’ll proceed to make it possible for we re-price deposits in step with market and money options, and we’re pleased with the motion we took.”
Nancy Fahmy, the pinnacle of the Funding Options Group for Merrill and Financial institution of America Personal Financial institution, stated the agency was seeing “an acceleration of money transferring off the sidelines.” Whereas shopper money balances reached 4 occasions larger from when the Fed started elevating charges, the latest charge minimize has been a “catalyst” for advisors and shoppers “actually trying to put their money to work.”
She additionally detailed the financial institution’s higher emphasis on different investments, noting that the agency was including about 50 new different funding funds to its platform every year and was seeing significantly robust curiosity from shoppers in areas like non-public credit score and infrastructure.
In line with Fahmy, BofA shoppers accessing alts have doubled over the previous 5 years, and year-over-year flows into alts are up 30%. In a latest examine of the agency’s rich shoppers, 93% of shoppers ages 21 to 43 reported they’d seemingly improve their alt allocations within the subsequent a number of years.
“We’re extremely proud to steer the business working with third get together companions to innovate so as to make options accessible to a broader set of our shoppers,” she stated.
