Merrill execs set $150B annual asset goal

Merrill is setting a goal of bringing in as much as $150 billion a year in fee-producing assets as a key revenue booster.

So said Eric Schimpf, president and co-head of Merrill Wealth Management, at a Bank of America investor’s day event Wednesday in Boston. Merrill’s parent Bank of America is under pressure to show results comparable to other large U.S. banks, driving CEO Brian Moynihan and other executives to present their case directly to investors for the first time in almost 15 years.

Schimpf said Merrill plans to contribute to Bank of America’s general strength by logging 5% in annual “organic” revenue growth. That’s growth stemming not from the appreciation of stocks and other assets under management but rather investments pulled in from new and existing clients.

Wealth management executives have set a target of bringing in between $135 billion and $150 billion into accounts that generate fees set as a percentage of the assets they have under management, he said. Fee-producing accounts are generally prized for their ability to yield steady streams of income.

Merrill reported last month that it had just over $2 trillion in fee-generating assets in its third quarter. That tally was bolstered by $24 billion in net new assets in the same three-month period.

“Over the last few years, we’ve generally been operating in line with the industry when it comes to net new asset growth, and we think we can do better,” Schimpf said. “The key to growth for us comes down to three things: Winning more clients and winning them faster through our unmatched lead-generation sources at the enterprise. Two, continuing our strategy to grow all assets of our financial advisor force. And three, the continuation of investing in technology to deliver for our clients and help increase our financial advisors and support teammates’ productivity.”

Improving profit margins through bank ‘cross-selling’

Lastly, Schimpf said, Merrill aims to improve its profit margin by four to six percentage points. Merrill and Bank of America Private Bank, which together comprise BofA’s Global Wealth & Investment Management Segment, reported last month that they had a pretax profit margin — a measure of revenue left over after expenses except taxes — of roughly 25%.

Schimpf said the increased profit margin will be driven by one of the main advantages held by Merrill and the other Bank of America wealth units : “our ability to deliver full banking and lending capabilities and solutions to our clients.”

Merrill is one of many wealth managers that try to make the most of their attachment to a large bank by steering clients to lending, savings and similar services. Such “cross-selling” not only provides additional sources of revenue, it also makes it harder to move their money elsewhere, since doing so would entail untangling several types of relationships.

Lindsay Hans, Schimpf’s fellow Merrill wealth co-head, said business just as often flows the opposite way: from the bank to the firm’s wealth management units. As an example, she noted that Bank of America already works with 45,000 large and small companies employing roughly 69 million people.

“For a large subset of them, they’ve established their relationship with Bank of America through a door other than [Global Wealth & Investment Management],” Hans said. “Their needs will evolve into looking for a fully advised wealth management relationship. Said differently, they are in our house today, and it is our responsibility and commitment to them to move them through the rooms of the house, and there are a lot of them.”

Last month, Bank of America cited banking services offered through Merrill and its other wealth management units as a key driver of its $6.3 billion in revenue logged for the quarter. That figure, up 9% year over year, marked a quarterly record for the firm.

The unit’s balance of loans to clients rose by 11% year over year to $253 billion. During the firm’s earnings call, Hans reported that Merrill and Bank of America Private clients turned to their advisors to open 26,000 bank accounts in the third quarter.

A $10 trillion opportunity

Returning to his goal of bringing in new assets, Schimpf said he and his colleagues estimate that there are roughly 11 million Bank of America customers who should also be Merrill clients. Of those, only 1.5 million work with Merrill today.

“We estimate those clients, again, who are not part of wealth management today, have at least $10 trillion dollars of investable assets,” Schimpf said. “Obviously just capturing 1% of that opportunity would be $100 billion in client flows. That alone is 2% growth towards our target of 4% to 5% to accelerate growth.”

How advisors fit into it all

Merrill’s plans to bring in new assets hinge in large part on its advisor workforce. Merrill and Bank of America’s other wealth management units haven’t reported an advisor headcount since January 2024.

Hans on Wednesday pegged the number at just above 15,000. Merrill is trying to rebuild its advisor workforce not only with a renewed commitment to recruiting experienced teams from industry rivals but also a training program now working with roughly 2,400 newcomers.

Schimpf said another priority is using technology to make the firm’s current advisors more productive. As is the case with many wealth managers, much emphasis of late has been on artificial intelligence, machine learning and similar innovations.

“Just recently, we put on every advisor and teammates’ desktop artificial intelligence that has the ability to review client statements, financial planning, documentation, market performance, results, notes to prepare a comprehensive client review in a matter of minutes,” Schimpf said. “Something that, up until a few weeks ago, was taking individual teammates hours and hours to complete — again, giving all of our teammates time back to invest in more clients.”