Merrill Edge Keeps Expanding, But "Mass Affluent" AUM Seems Slow To Grow

Monday, October 10, 2011 08:02
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Merrill Edge Keeps Expanding, But

The mass market advisory unit that Bank of America set up last year to leverage the Merrill Lynch name is hiring service reps left and right -- but the assets are proving a little more stubborn to capture.

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"Merrill Edge," which Bank of America runs in bank branches and over the telephone, is ramping up fast.

 

Adding 180 advisors in the New Jersey call center and another 40 in mid-Atlantic banks should bring their total numbers up to around 720.

 

Most of the recent hiring seems to be for phone reps, who are presumably able to be a lot more efficient because their target market is nationwide and always able to pick up the handset and make a transaction.

 

And any structure that can better serve middle class families can be a good thing.

 

In practice, though, the program seems to be getting ahead of its assets.

 

If Merrill Edge started out with a "seed" of $50 billion in Bank of America accounts and about 500 reps moving over from Bank of America investment desks, that would represent about $100 million per rep -- pretty impressive.

 

But with 1.5 million clients on their rolls, that would come to about $33,000 per client and, in theory, 3,000 accounts for each rep to service.

 

Hard to tell whether the telephone model can scale that much. 

 

And since the program launched with those accounts, they've added at least 220 advisors -- beefing up by 44% -- while AUM has only grown by 38%. 

 

Remember, most of these new reps are coming into the phone side, where they can be "on call" to serve more clients.

 

Hire for hire, they're actually serving fewer.

 

One troubling

 

 

http://www.investmentnews.com/article/20111009/REG/310099975

 

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