It is no secret that Brian Moynihan is intent on pushing Bank of America’s private banking model over the wealth management model. Moynihan often chastises wealth management stating that “it is the least profitable division in the firm.” Do advisors feel supported in that? We question where the plan is to aggressively invest and make things better for advisors, the newly released compensation grid threw a miniature bone to advisors, doing away with some unpopular constraints and penalties, however, is an anemic handout enough? We think not. Of course, this just mounts the tension given oversight and compliance measures, and the pressure to fit into the cultural newbie advisor doctrine, leaving seasoned advisors to wonder what is going on despite leaders commenting on how much they value veteran advisors – the proof is in the actions, not the words.
Co-head of Merrill Lynch wealth management, Lindsay Hans, said that the bank-wealth management pairing offers “whatever door you need to walk through – they may walk through the door of the retirement plan, the institutional retirement plan, but there are individuals who then say, ’Well, wait a minute, I’ve got a wealth management need.” Hans stated that organic growth for wealth management will come vis à vis the bank and its suite of products.
Hans went on to say that 50% of wealth management clients conduct their banking through Bank of America and that there remains 50% of the bank’s clients that should be able to be converted to wealth management. Hans noted that quite a number of existing bank clients either manage their own accounts or utilize Merrill Edge robo investing for investment solutions. What she believes this proves as an opportunity is unclear. Wealth management derives 60% of revenue from fee-based business, 10% from commissions, and about 33% from lending and banking.
Not only is Merrill’s approach intended to increase profitability of the parent firm, but it is also to address the relative shortage of advisors due to retirement. The firm’s answer to this is its young training program in which it indoctrinates inexperienced recruits to the firm’s views – thus controlling and pushing from the private bank model versus wealth management, ensuring the holy host of firm services are included. Lead generations, says the firm, is primarily coming through this effort. The firm is not recruiting seasoned advisors, it prefers this approach. Ultimately, it looks like wealth management will become similar to a financial service provider that has a lot of assets, the house controls the assets, and advisors can come and go but assets remain. This isn’t the personalization that clients of Merrill have come to expect through time. As advisors state, Merrill is a different firm now and this trajectory only confirms the divergent path is the chosen one.
As the Editor of The Gershman Group, a boutique financial services consulting firm, TGG brings expertise in financial analysis, strategic planning, and market research. With a keen eye for detail and a passion for helping businesses navigate complex financial landscapes, TGG delivers insightful, high-quality content to empower informed decisions. Backed by years of industry experience, TGG makes complex topics accessible through clear and compelling communication, shaping the firm’s thought leadership and commitment to excellence in financial services.
