Merrill Lynch Counting on a Boost in Household Clients This Year

Merrill Lynch Wealth Management expects to add 47,000 new households to its FAs’ client rosters this year — 40,000 or 6.5 times more than the households they added two years ago. The forecast is based on an annualized analysis of first quarter results according to Merrill Lynch Wealth Management head Andy Sieg, who spoke at an industry conference earlier this week.

Two years ago Seig introduced FA compensation changes that rewarded FAs for adding households to their client roster and punished them if they failed to do so. This has led to compensation of 2% higher for FAs meeting the targets and 2% lower for those who failed. Those changes to the FA compensation are not “solely” responsible for the dramatic uptick in Merrill Lynch’s new households now unfolding, Sieg cautioned.

Before the changes were implemented, FAs were bringing in on average two-and-a-half clients and losing two a year, Sieg said. In comparison, the same averages today are six new clients per FA and two lost clients — or a doubling of net new clients for the average advisor.

Sieg also told his audience to expect Merrill Lynch to add more FAs. Most of Merrill Lynch’s new FA hires will start with Bank of America’s roboadvisor offering, Merrill Edge; then, after a few years, they'll transition to the wirehouse’s core FA training program.

In recent years, its traditional FA roster has grown about 1% per year, Sieg said. Merrill Lynch and its parent BofA employed 17,534 financial advisors in the first quarter of this year, compared to 15,323 in the same time period five years ago. But some of the growth in the FA roster is outside its wirehouse and other traditional FA units. About 16% of the FAs employed by BofA now work its consumer banking division, compared to 11% five years ago.

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