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Merrill, MSSB rebounding nicely

Revenue up at both brokerages; client assets also on the rise

The two largest Wall Street brokerages rebounded nicely in wealth management last year, with Bank of America Merrill Lynch beefing up its adviser force, and both it and Morgan Stanley Smith Barney LLC posting healthy increases in assets under management and adviser productivity.
Merrill, which reported earnings this morning, added 327 reps to its Merrill Lynch Global Wealth Management adviser force in 2010, increasing its ranks to 15,498.
Morgan Stanley, still integrating the May 2009 acquisition of a controlling interest in Smith Barney from Citigroup Inc., actually reduced adviser ranks by 92, giving it a total of 18,043 at the end of last year.
Despite the head count reduction, non-interest revenue from the Morgan Stanley wealth management unit for the fourth quarter was up 7% from the year-earlier period, to $3.01 billion. Revenue for the year was $11.5 billion.
Morgan Stanley registered representatives contributed an average of $742,000 in revenue to the firm in 2010 — 7% more than the previous year.
The average Merrill adviser, on the other hand, contributed $854,000 to the firm in 2010. That’s just 4.3% higher than the previous year, but still about 15% more than the average Morgan Stanley adviser contributes. Total revenue for Merrill surged 8.7% in the fourth quarter to $3.55 billion, and was up 4.1%, to $13.11 billion, for the full year.
Both firms saw assets under management grow substantially during the year, thanks in part to the recovering securities markets. At Merrill, total client assets were up 6% to $1.58 trillion — or $101.8 million per representative.
Morgan Stanley was managing $1.67 trillion in assets at year-end, or $93 million per representative. In its earnings release yesterday, the firm said it took in $22.9 billion in new assets with nearly two-thirds of that amount ($14.1 billion) coming in the fourth quarter.
The profitability of the two adviser groups is difficult to compare, as Bank of America Corp. doesn’t break out Merrill Lynch from the rest of its wealth management operations, which include private bank U.S. Trust and Retirement Services. As a group, however, net income for the year fell to $1.35 billion — $369 million less than in 2009.
In its earnings release, Bank of America said the lower profitability was due primarily to “higher revenue-related expenses, support costs and personnel costs associated with further development of the business.”
Profits from Morgan Stanley’s wealth management operations, on the other hand, came in at $820 million — $519 million of which is applicable to Morgan Stanley. That’s more than double the amount the unit earned in 2009.