Ultra-Rich Investors Flock to Bank of America’s Wealth Management Businesses

The influx continued in the initially quarter this calendar year with one more 214 in new ultra-rich customers, the bank mentioned. 

“The sum of new customer activity we have throughout Bank of America—the Merrill small business and the private bank—is pretty hanging,” states
Andy Sieg,
president of Merrill Prosperity Management. “It’s not just a Florida tale or just a Silicon Valley story, it’s development in the enterprise around the U.S. reflecting broad developments in the extremely-large-internet-well worth market.”

These tendencies contain the transfer of wealth involving generations, much of which is “wrapped up in improvements in business possession as toddler boomers are thinking about this as the second to sell a family business,” Sieg claims. That, subsequently, “creates have faith in and estate setting up and asset transfers” that the prosperity management units can facilitate, he suggests.

The coronavirus pandemic, and the sharp downturn in the sector this 12 months, also moved investors to just take motion.

“These are purchasers who decided to use this new environment to take a step back and believe about the place they needed to have their wealth administration connection,” Sieg claims. 

Katy Knox,
president of the non-public bank, states they are witnessing “business possession changeover at historic amounts.” 

Owners who are nearing retirement age are a factor in this change, Knox states, but the pandemic also spurred quite a few entrepreneurs to “take a move back again and imagine about their priorities, their legacy, to feel about their business and actually their reason.” 

The non-public bank’s philanthropic expert services, for occasion, grew to become “a substantial driver of not only new relationships but certainly assets under management,” Knox states. It “drove a ton of important discussions and highlighted the specialised abilities that we have.”

A Solid Start out to the Year 

The selection of new customers overall at the financial institution is apparent in its initially quarter outcomes. 

General, Lender of America’s prosperity management corporations had US$1.57 trillion in assets beneath administration as of the initial quarter, a 7% achieve from a calendar year before. Income at the combined corporations, which incorporates shopper investments, rose to US$5.5 billion in the to start with quarter, up 10% yr-more than-yr.

Separating out the models, Merrill experienced US$1.24 trillion in property less than administration, an 8% get from a year before, although the private financial institution experienced US$334 billion in belongings under management, up 3% from a year earlier.

Merrill’s profits achieved a report US$4.6 billion in the very first quarter, a 10% gain from a year ago, while the personal bank’s income at US$887 million was 13% higher than a calendar year in the past.

Each Sieg and Knox also credit history referrals for a great deal of the expansion in extremely-significant-internet-worthy of consumers, from inside of the financial institution as perfectly as exterior of it. 

The referrals within come from relationships the lender has with 90% of Fortune 1,000 businesses, 25% of mid-to-huge sized enterprises in the U.S, and from serving additional than 3.2 million small business clients. 

Because the beginning of 2021, about a single out of five new extremely-high-net-really worth shoppers ended up referred to the wealth administration companies from elsewhere in the lender, such as the worldwide business bank, world corporate and expense financial institution, and from its retail, chosen, and modest business banking companies, the lender said.

“I actually do consider it differentiates us,” Knox states. “I’ve been in all these distinctive enterprise lines above the decades and I have observed it on each sides. Assisting a organization operator as they are starting, expanding, expanding…and then as they changeover their firm and us becoming there on the wealth aspect to make guaranteed they are wondering by means of it.”

For new clientele who did not have an current company partnership, “there was only one degree of separation due to the fact they had been referred in by anyone who is already a consumer of the non-public financial institution or Merrill,” Sieg adds. “In wealth management and surely in the extremely-substantial-internet-truly worth echelon of wealth administration, referrals and discussions that materialize from friends, relatives associates, trustworthy business enterprise partners—those are very potent and significant.”

The lender also interacts with wealthy individuals “as a client bank, as an investment decision lender, as a world markets participant and as a result of that context, …with senior folks in the investment local community,” Sieg says. “Any of individuals connect points are sites a dialogue can start on a wealth management connection.”

The expansion in new ultra-wealthy consumers, which involves company executives and multi-generational family members in addition to business entrepreneurs, was also deliberately fostered by means of the enhancement of a sturdy team of advisors, a target on giving streamlined products and services, and key investments in technological know-how. 

The pandemic triggered several men and women to want to simplify their economic lives, Sieg claims. That created a “heightened appeal to a 1-cease store that can provide substantial-top quality companies to a higher-net-truly worth/ultra-significant-internet-well worth consumer across their fiscal lifestyle.”

The bank’s ultra-wealthy shoppers are also discerning engineering shoppers, with approximately 90% working with the bank’s digital abilities as opposed to 81% throughout the relaxation of the wealth spectrum. Each and every calendar year the bank spends about US$3.6 billion on new electronic and know-how initiatives. 

These abilities allow for the bank to seamlessly move throughout investing, banking, and borrowing, Sieg suggests. 

Bank of America’s prosperity management organizations also catch the attention of clients wanting for specialty lending expert services, these as its artwork lending enterprise, which it claims is the greatest in the globe. “In addition to accumulating artwork, we see our collectors concentrating on that as an possibility to get liquidity,” Knox says.