Third quarter revenues declined for Merrill Lynch, where adviser headcounts continue to rise amid a time of change for the wirehouse.

Revenues dropped 1.7% compared to the same period last year due to lower transactional sales, the wirehouse reports in its latest quarterly earnings

Declines, however, were offset by higher net interest income, led by growth in loan and deposit balances and a rise in long-term AUM flows, according to Merrill.

Client balances at the wirehouse were up 7.5% year-over-year, totaling to nearly $2.1 trillion, reports the wirehouse. Meanwhile, headcounts rose for the 11th consecutive quarter to 14,552 advisers, an increase of 136 from last quarter. The firm credits the consistent growth to its successful graduate training program, competitive recruiting and historically low competitive and total attrition levels.

(Bloomberg News)
(Bloomberg News)

"Our strategy has enabled us to increase client balances, fee-based relationships, and the adviser force we’ll need to meet clients’ growing needs and capture future opportunities," a Merrill spokesman said.

As part of its plans to implement the Department of Labor's fiduciary rule, the wirehouse is re-organizing its business to deliver personalized goals-based advice. Merrill recently announced that the firm will no longer offer new advisory brokerage IRA accounts starting in April. Clients will be provided with flexible pricing in order to ease transitions from brokerage retirement accounts to fee-based platforms, Merrill says.

Merrill has launched other investment options – Merrill Edge Self-Directed brokerage platform – to target clients that are moving away from the adviser model. Last month, Merrill announced an in-house digital advice platform, Merrill Edge Guided Investing, a robo adviser that will be available next year.

The wirehouse also saw a shuffle at the top of its ranks earlier this month, with current head John Thiel, stepping down to make way for Andy Sieg, Merrill's head of Global Wealth and Retirement Solutions. Thiel will take on a new role as vice chairman of Bank of America's Global Wealth and Investment Management.

Earlier this month, John Thiel, head of Merrill Lynch, announced that he will be stepping down to make way for Andy Sieg, Merrill's head of Global Wealth and Retirement Solutions.

Earnings for Bank of America's Global Wealth and Investment Management, a division that houses Merrill Lynch, U.S. Trust and the Private Banking and Investment group, reported better performance. Net income for the division soared to $697 million, an increase of 10.2%, compared to the year before.

Revenue however was down 1.6%, due to lower transactional revenue caused by market factors and shifting activity from brokerage to managed relationships, the firm reports.

Bank of America, on the other hand, reported its best third quarter for fixed-income trading in five years, becoming the third major U.S. bank to blow past analysts’ estimates for the business.

Bond-trading revenue surged 39% in the period, driven by rates trading and benefits from the firm’s debt-underwriting strength, Charlotte, North Carolina-based Bank of America said Monday. The gains helped fuel a 7.3% jump in profit.

Bank of America’s report adds to early signs on Wall Street that a multiyear slump in fixed income might have touched bottom. Citigroup said last week that its bond-trading revenue surged 35%, and JPMorgan Chase posted $4.33 billion from the business, $1 billion more than estimates.

Bank of America’s net income climbed to $4.96 billion, or 41 cents a share, from $4.62 billion, or 38 cents, a year earlier, the bank said in a statement. Earnings per share excluding accounting adjustments were 42 cents, beating the 33-cent average estimate of analysts surveyed by Bloomberg.

Chief Executive Officer Brian Moynihan has been cutting costs for years while contending with persistently low interest rates. That’s now paying off as the company moves beyond epic legal claims over mortgages that soured in the financial crisis. Earnings increased in all four of the bank’s major business lines.

Revenue rose 3.1% to $21.6 billion. Expenses fell 3.3% to $13.5 billion, in line with analysts’ estimates.

Bank of America shares were little changed at $15.98 at 10:51 a.m. in New York. The stock has lost 5.1% this year, trailing the 2.6% decline for the KBW Bank Index of 24 U.S. lenders.

With additional reporting by Bloomberg News.

Nicholas Yeap

Nicholas Yeap

Nicholas Yeap is an Associate Editor for Financial Planning, Bank Investment Consultant and On Wall Street.