Bank of America Merrill Lynch saw a record $24.3 billion in new financial benefit plan assets in 2012, a 30% increase over the previous year, as it plans to strengthen that growth with a bigger push into the investment bank in 2013.
The $24.3 billion total is up from $19 billion in new assets to the retirement and benefit plan services the firm won in 2011 and $17 billion in 2010.
Much of that growth came from the firms partnership between the Global Commercial Bank and the benefit plan businesses, which grew by more than $10.6 billion in new assets in 2012. By contrast, that business saw $5 billion in new assets in 2011, $3.6 billion in 2010 and $700 million in 2009.
The firms financial benefit plan assets also saw strong growth in the 401(k) business last year, with a record total of $8.4 billion in new assets. That was up 30% from 2011, which saw $6.5 billion in new 401(k) assets. The firms Advisor Alliance program serving small to mid-sized businesses also grew by $4.2 billion in new assets last year, up from $4 billion in in 2011 and $3 billion in 2010.
The numbers are going up because [we] had many more channels than [we] had before, Kevin Crain, head of Institutional Retirement and Benefit Services at Bank of America Merrill Lynch, said. Now the opportunity is [to] mature all those channels and watch it all connect.
The Global Commercial Bank, which was first formed when Merrill Lynch was acquired by the bank, is the most mature of those channels, according to Crain, which accounts for the size of its growth. That business targets the small to middle market companies, and has about 30,000 existing clients.
We had a great suite of product offerings, in the commercial bank, Crain said. We started with the commercial bank because small to middle market clients fit perfectly with the designated [financial advisor] effort.
Bank of America Merrill Lynch began providing designations for select financial advisors working with its 401(k) consulting business last year, with the aim of deepening their expertise when it comes to working with corporate clients. That designation process has helped boost the firms profile in the commercial bank channel, Crain said.
Bank of America Merrill Lynch is now focusing on moving up the market to win large to mega market type clients by teaming with the investment/corporate bank. Starting in the second half of last year, the firm began targeting about 100 to 150 of their existing clients for the larger, more complex relationships, according to Crain.
Were working through client by client getting introductions and presenting our integrated suite of services, Crain said of the larger clients, which are expected to want fully integrated benefits including 401(k), defined and non-qualified benefits, and also possibly health care savings plans.
Its a longer gestation period to being introduced, to talking about your businesses to ultimately getting a sales opportunity to closing the business, Crain said of the larger clients the business is targeting.
But those efforts already started to show progress in 2012, he said, with the investment bank accounting for about $5 billion in retirement sales from its existing clients versus about $10 billion for the commercial bank.
Moving forward, the investment bank business should be a larger contributor to that growth, according to Crain. Overall, the firms financial benefit plan business has raised $8.8 billion in new commitments toward this years goals as of the end of January.
If you look at 2013, the commercial bank will keep moving along the way its been. The investment bank, with a targeting effort, I expect to be even bigger, Crain said. My goal is I want to be working all the channels of the bank and get them engaged in my business. As those different segments mature, it creates broader growth opportunities for our business.