Merrill Lynch advisors have been adding more clients and boosting assets, indicating that new growth incentives and tech upgrades are having the positive effect executives hoped for — though some policy changes aren’t likely to bear fruit for a bit longer.

Experienced Merrill Lynch advisors — those not in the training program — notched 4.6 million new households on an annualized basis in the second quarter. That’s up from 71% year-over-year, according to the firm.

To be sure, increases were seen across the board, not just in the upper echelons. Client balances for Merrill reached $2.3 trillion for the quarter, up from $2.2 trillion for the same period a year-ago, a 4.5% increase.

“Our local market strategy is helping to better integrate our lines of business and deepen client relationships, especially within Merrill Lynch Wealth Management,” CFO Paul Donofrio said during a conference call with analysts. “Merrill Lynch organic household acquisition has not been this high for at least five years.”

For its 2018 comp plan, Merrill Lynch added new carrots and sticks, offering advisors an opportunity to earn an extra 1% pay increase for growth in net new assets relative to last year’s levels. The stick? Advisors can also see a pay cut if their growth falls below a certain level.

But that’s not all the firm has done to spur the thundering herd onwards.

A recognition program to celebrate advisors who are achieving high growth has also helped as has some operational changes meant to ease advisor workloads so brokers can focus on client acquisition and serving existing clients, according to an executive familiar with the matter but who asked not to be named.

“It’s reflective of an energy in the culture of the thundering herd,” the executive said.

Advisor attrition has also dropped to a record low. The firm’s FA ranks, at 14,820, were down by only nine brokers from the previous quarter.

(Bloomberg News)


The firm has also been making investments in its client-facing technology, including new mobile app features. New advisor-facing tools are in the works, but not likely to debut until later this year, according to people familiar with the matter.

Brian Moynihan, CEO of Bank of America, which owns Merrill Lynch, said during the company’s earnings call that the bank has plans to invest $500 million in further technology upgrades.

The bank's self-directed platform, Merrill Edge, reported brokerage assets of $191 billion, up from $159 billion for the year-ago period. And number of accounts for the company's robo advisor, Merrill Edge Guided Investing, has more than doubled since its launch, rising to 974,000 from 474,00, the company said.

Merrill Lynch has also revamped its training program, though executives caution that results of improved training may not be visible for several quarters.

Bank of America’s wealth management unit, which includes Merrill Lynch and U.S. Trust, reported net income increased to $968 million from $804 million, a roughly 20% increase. The unit’s bottom line was boosted in part by lower income tax expenses, which dropped to $330 million from $488 million.

The unit’s revenues rose to $4.7 billion from $4.65 billion for the year-ago period, the bank reported.

In addition to new technology investments, Merrill Lynch advisors are also awaiting the results of a policy review following the demise of the Department of Labor’s fiduciary rule. Merrill Lynch is evaluating whether to further relax restriction on commission business in retirement accounts.

Any policy changes are likely to be announced in August.