Bank of America Corp. will hire more than 500 advisors in its Merrill Edge unit by the end of the year, nearly doubling the count of employees that work with clients with smaller investment portfolios.
The increased hiring of financial solutions advisors is part of the bank's determination to turn its No. 1 deposit ranking into a bulging source of investors for its brokerage services. These advisors, who are salaried with incentive targets as opposed to commissioned, are based in branches to work with clients who have $50,000 to $250,000 in investable assets -- a class Bank of America calls "preferred."
In the brokerage world, those clients have largely been ignored, or seen products targeted at them fall by the wayside.
Citigroup Inc. attempted a similar strategy before the financial crisis, an idea which was backed by Sallie Krawcheck and Andrew Sieg. Krawcheck is now the head of wealth management at Bank of America and Sieg is a top lieutenant as head of retirement services.
As banks struggle to create revenue amid a weak loan environment, a flood of new attempts are being made to tap the so-called mass affluent.
Bank of America's Merrill Edge is counted as part of the bank's consumer retail business, not the wealth management unit. The idea is to advise less wealthy customers than those the "thundering herd" of Merrill Lynch advisors service, giving Bank of America more chances to collect revenue from customers. The bank says it has more than 8 million customers that fall into its preferred category.
Banks consider the primary checking account to be a central source of information on customers and a sign of willingness to do more. Bank of America topped $1.02 trillion in deposits during its first quarter. It has said, so far, Merrill Edge customers have been bringing money from other brokerages.
Dean Athanasia, head of the preferred and small business banking clients, said the bank is trying to give the customers more attention and make it apparent that the more services they use, the more benefits they get.
To that end, the bank is also expanding from three states to 15 its pilot on the "platinum privileges" program, which is for customers with over $50,000 in deposits or investment balances across Bank of America.
Athanasia said the customers are the most profitable at the retail bank and that the bank is also enhancing other technology and phone services to help catch these clients.
"They drive a lot of revenue, a lot of profit, and they are fast growing," Athanasia said. "We are trying to get these folks more attention, to service them specifically."
He said Merrill Edge is ahead of competitors because of the "natural resources" of the branch network and from Merrill. Because of that, he said it would be easy to expand more, though at this time there are no hard plans to hire past the 500 advisors.
David Benoit is a reporter for Dow Jones Newswires, where this story originally appeared. Write to him here.