Merrill Lynch Wealth Management added almost 4,800 net new clients in the third quarter, remaining “relatively consistent” with prior periods and a satisfactory result “given the quieter summer months,” said the co-president and co-head of Merrill Lindsay Hans, during an estate. -Specific call for third quarter earnings.
However, the firm saw a significant change in the wealth of new clients, which Merrill considered an essential part of its growth strategy.
“Specifically, new customers over $500,000 account for a larger portion of our growth, and the number of net new customers over $10 million doubled in the quarter versus the same period last year,” said Hans.
Average deposits in Bank of America's Global Wealth and Investment Management division fell to $280 billion, down 4% from a year ago and 3.6% from the previous quarter.
But the firm's total wealth client balances (including BofA retail, Merrill Wealth Management and Private Banking client investments, deposits and loans) reached a record $5.9 trillion, including $3.5 trillion at Merrill Wealth, an 18% from year to year. increase, according to the company's income for the third quarter.
Merrill Lynch and Private Banking posted $5.8 billion in revenue, up 8% year over year, which the firm attributed to higher asset management fees based on higher market caps and strong AUM flows. Fee-based flows were approximately $61 billion year-to-date, up 32% year-over-year, driven by new client acquisitions and “advisors working with existing clients to reinvest assets.”
The gains are the first since the Federal Reserve cut rates by 50 basis points in late September, with more cuts likely later this year. Earlier this year, BofA also chose to increase the amount it paid on bank deposits and write off for the first time in years.
Merrill Wealth co-head and co-president Eric Schimpf said the firm could not make “forward-looking” statements about how rates might change in the future, other than to commit to “pricing in line” with markets, including cash alternatives and money market funds. .
“As everyone knows, we made some changes to our pricing in response to the interest rate environment and we did that earlier this year,” he said. “And we'll continue to do that and we'll continue to make sure we reprice deposits in line with market and cash alternatives, and we're proud of the action we've taken.”
Nancy Fahmy, head of the Investment Solutions Group for Merrill and Bank of America Private Bank, said the firm was seeing “an acceleration in the movement of cash.” While client cash balances have quadrupled since the Fed started raising rates, the latest rate cut has been a “catalyst” for advisers and clients “really looking to put their money to work.” .
She also detailed the bank's increased emphasis on alternative investments, noting that the firm was adding around 50 new alternative investment funds to its platform each year and was seeing particularly strong interest from clients in areas such as private lending. and infrastructure.
According to Fahmy, BofA clients accessing alts have doubled over the past five years, and year-over-year flows into alts are up 30%. In a recent survey of the firm's affluent clients, 93% of clients ages 21 to 43 reported they were likely to increase their alt allocations in the coming years.
“We are extremely proud to lead the industry working with third-party partners to innovate in order to make alternatives accessible to a wider group of our customers,” she said.