Merrill Executives Pledge $150B Annual Asset Growth to Investors

Merrill has outlined an ambitious plan to attract $150 billion annually in fee-producing assets. This objective was announced by Eric Schimpf, president and co-head of Merrill Wealth Management, during a Bank of America investor’s event in Boston.

Merrill’s Growth Strategy

Under parent company Bank of America, Merrill is under pressure to deliver strong performance. CEO Brian Moynihan and other executives presented their strategy to investors for the first time in 15 years. Schimpf highlighted that the firm aims for a 5% annual organic revenue growth, focusing on attracting investments from both new and existing clients.

Targeting Fee-Producing Accounts

• Merrill targets an influx of $135 billion to $150 billion in accounts generating fees.
• These accounts provide steady income streams, a crucial factor for the firm’s revenue stability.

Merrill’s recently reported fee-generating assets exceeded $2 trillion, bolstered by $24 billion in net new assets over the last quarter.

Enhancing Profit Margins

Schimpf emphasized the need to improve profit margins by four to six percentage points. Currently, Merrill and Bank of America Private Bank report a pretax profit margin of about 25%. The enhancement in margins is linked to Merrill’s capacity to offer comprehensive banking services to clients.

The Cross-Selling Advantage

Cross-selling allows Merrill to provide additional services, creating a complex web of client relationships that discourages moving assets to competitors. Lindsay Hans, co-head of Merrill Wealth Management, noted that business often flows from Bank of America to Merrill’s wealth management sectors.

Expanding Client Relationships

With around 11 million Bank of America customers eligible to utilize Merrill’s services, only 1.5 million are currently clients. The untapped market holds an estimated $10 trillion in investable assets.

• Capturing just 1% of these assets could yield $100 billion in client flows.

The Role of Advisors

Merrill relies significantly on its advisor workforce for acquiring new assets. The advisor count now exceeds 15,000, as the firm accelerates its recruitment and training efforts. Approximately 2,400 new advisors are currently in training programs.

The integration of technology is also a priority. Schimpf discussed implementing artificial intelligence tools to enhance productivity among advisors, allowing them to serve clients more efficiently.

“We recently equipped advisors with AI technology to streamline client reviews, cutting down preparation time significantly,” Schimpf stated.

Conclusion

Merrill’s strategy to achieve $150 billion in annual asset growth reflects its commitment to enhancing client relationships and improving operational efficiency. As the firm navigates the competitive landscape, its focus on technology and advisor effectiveness will be crucial to its success.