NEW YORK: Bank of America's wealth business is struggling to retain younger financial advisers, who are having a hard time meeting revenue targets because they have a small book of business, Chief Executive Brian Moynihan said on Monday.
Big wealth firms have had trouble developing young staff, creating a conundrum as older peers approach retirement, industry studies show.
Many smaller advisers get frustrated with challenging performance targets, and either move to smaller firms or leave the industry entirely to pursue other careers, recruiters say.
Bank of America has been trying to fix this with programs that pair younger advisers with experienced broker teams, among other efforts.
But it is still losing inexperienced advisers. "The attrition we see is in the lower production levels, mainly due to people not being able to build a book of business," Moynihan said on a call with analysts about the bank's second-quarter results.
Bank of America's wealth unit reported $722 million in quarterly profit, an 8-percent rise compared with the year-earlier period. Its profit margin rose to 26 percent from 23 percent, as revenue declined 2 percent to $4.5 billion. The business, which includes Merrill Lynch, has played a significant role in Bank of America's strategy to grow revenue from more stable businesses that require relatively little capital.
The broader bank reported a 19-percent profit decline. The wealth business has recently been helped by the expiration of expensive retention bonuses, paid to Merrill Lynch financial advisers as an incentive to stay when it acquired the brokerage in 2009.
The last installment of those bonuses was paid out in the fourth quarter of last year.
Moynihan said experienced advisers are not leaving because the bonuses evaporated. Experienced advisers who have left over the last year have done so because the wealth unit has pulled back from international markets, he said.
Merrill Lynch's headcount rose by 151 over last year to reach a total of 14,416 advisers.
The number of Merrill advisers has fluctuated over the years, from nearly 15,000 in 2012 to roughly 13,750 in early 2014.
Analysts had expected big banks to report weaker wealth management results, as market volatility made clients uneasy about investing.
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