Bank of America Corp.'s relatively new wealth-management unit for mass-affluent consumers is on target to meet growth goals, despite recent shakeups at the company's broader retail bank.
Since B of A launched Merrill Edge in June 2010, the unit's assets rose 31%, accounts climbed 21% and revenue jumped 75%, according to B of A preferred and small-business segment executive Dean Athanasia. B of A had previously set a program target of increasing customer investments by 10% per year.
Athanasia, who gained more responsibilities when B of A reshuffled its retail bank executives in October, spoke to reporters during a conference call on Tuesday. He was joined by other B of A executives.
B of A considers customers with $50,000 to $250,000 in investable assets to be mass affluent. Providing wealth management services to this group has proved difficult for banks in the past: HSBC said earlier this year that it would drop efforts to attract six million account holders to its Premier banking service citing high costs of the program.
But where others have failed, B of A says it will be successful because it already has the necessary infrastructure, such as a large network of ATMs and branches and well-established online capabilities, to make the program cost effective, Athanasia said on Tuesday.
"This traditionally has been a hard segment to serve," Alok Prasad, head of Merrill Edge, said during the conference call. "We have the infrastructure that is scalable and the needs are fairly standardized for this group. They don't have complex trust issues and there is not a lot of complexity in their assets."
B of A has doubled its number of wealth management advisers to 1,000, despite plans to cut as many as 25,000 to 30,000 jobs over the next few years.
-- This article first appeared on American Banker.