What is Merrill Lynch & Co.?
Merrill Lynch & Co. is the historic Wall Street investment firm founded by Charles E. Merrill in 1914. Today it no longer operates as an independent public company: after being acquired by Bank of America in 2009 it is branded as “Merrill” and functions as Bank of America’s wealth-management arm. The firm is best known for retail brokerage and wealth management, though historically it played an important role in investment banking and structured-product markets.[Investopedia; Bank of America]
Headlines / key facts
– Founded: 1914 by Charles E. Merrill.[Investopedia]
– Current structure: Wealth management division of Bank of America, branded as “Merrill.”[Bank of America]
– Headquarters: 250 Vesey Street, Manhattan, New York.[Investopedia]
– Scale (recent figures cited): assets under management (AUM) of about $2.75 trillion and roughly 19,000 financial advisors.[Brokerage-Review.com]
– Public history: IPO in June 1971 and NYSE listing; troubled during 2007–2008 crisis; acquired by Bank of America in an all-stock transaction announced in Sept. 2008.[Investopedia; Businesswire; Bank of America]
A short history (high level)
– Early decades: Grew into one of the largest U.S. retail brokerage houses and a recognizable financial brand.[Investopedia]
– 1971: Completed an initial public offering and began trading publicly.[Investopedia]
– 2000s: Expanded via acquisitions (including entry into subprime lending through First Franklin Financial in 2006) and became active in mortgage-backed CDO markets.[Investopedia]
– 2007–2008 crisis: Reported large losses tied to subprime and related derivatives in late 2007; this triggered asset sales, executive departures, and ultimately the merger/acquisition negotiations in 2008.[Businesswire; Investopedia]
– 2008–2009: Bank of America agreed to acquire Merrill Lynch (announced Sept. 2008; completed as a large all-stock transaction), and the Merrill brand was integrated into BofA’s wealth-management platform.[Bank of America]
How Merrill operates today
– Primary focus: Wealth management for individuals, families, and institutions via financial advisors (the legacy Merrill Lynch advisor force) and a self-directed platform (Merrill Edge).[Investopedia; Bank of America]
– Integration with a big bank: As a division of Bank of America, Merrill’s services are part of a broader banking-wealth ecosystem (bank deposits, lending, investment management, custody, etc.). This provides scale but also means client experience and product offering are shaped by the parent bank’s policies and systems.[Bank of America]
Digitalization and business-model changes
– Shift toward digital: Like most large broker-dealers, Merrill has been adapting to fintech trends—shifting smaller accounts toward digital/self-directed platforms and encouraging advisors to focus on higher-balance households.[Financial Planning]
– Compensation changes: In 2021 Merrill tightened payout rules for advisors on small accounts—prohibiting production-credit payouts for households under $250,000—reflecting industry moves to favor higher-balance relationships and move smaller clients to digital channels.[Financial Planning]
– Strategic effect: These changes aim to improve economics per advisor and scale digital servicing for lower-balance clients, but they also create friction for small-account clients and for advisors whose business relied on many small households.
Why these developments matter to different stakeholders
– Retail clients: Access to a large advisor network and integrated bank/wealth services, but greater emphasis on minimum balances to receive full advisor attention.
– Advisors: Pressure to build higher-balance relationships or adapt to hybrid/digital models; changes in payout rules affect compensation and client segmentation.
– Investors in financial firms: Merrill’s history illustrates risks from structured-product exposure and the potential impact of systemic crises.
– Institutions: Merrill remains a large provider of wealth-management services and custody/prime brokerage capabilities via Bank of America.
Practical steps — for clients, advisors, and other users
A. If you’re a retail investor considering or already with Merrill (Merrill/Merrill Edge)
1. Identify what you want: advice-heavy (full-service) vs. self-directed investing. Choose Merrill (advisor) if you want human financial planning; choose Merrill Edge if you want lower-cost, digital trading and tools.
2. Check account minimums and fee structure: Ask your advisor or online representative about minimum household balances, advisory fees, trading commissions, and custodial costs. Confirm whether your relationship qualifies for discretionary advice or lower-cost digital servicing.
3. Confirm protection and custody: Verify how your assets are custody-held (BofA/Merrill custody) and review SIPC and any additional protections.
4. Review conflicts of interest: Ask how product recommendations could be affected by Bank of America relationships (e.g., proprietary products, lending referrals).
5. Consider consolidation or tiering: If you have multiple small accounts, consider consolidating to meet advisor minimums or deliberately moving smaller accounts to a robo-advisor or self-directed platform to reduce fees.
6. Monitor service and costs annually: If you’re paying for human advice, evaluate whether the level of service and returns justify the cost and consider alternatives (RIAs, independent brokers, robo-advisors).
B. If you are/act as a financial advisor at Merrill
1. Understand payout and production rules: Know the thresholds (for example, the cited $250,000 household rule for production credits) and how they affect your compensation.
2. Re-segment your book: Prioritize higher-balance households for full-service relationships; create a pathway for smaller households (digital tools, group workshops, or referral to robo platforms).
3. Invest in digital solutions and client acquisition: Use Merrill/BofA digital tools to scale communication and onboarding; emphasize fee transparency and holistic planning to retain clients.
4. Consider career alternatives if needed: If your practice depends on many small accounts, evaluate whether an independent RIA, hybrid platform, or another broker-dealer better matches your economics.
C. If you’re an institutional investor, consultant, or large client
1. Perform due diligence: Review Merrill’s custody, operational controls, and any legacy litigation or regulatory matters stemming from previous eras.
2. Negotiate terms: Large clients should negotiate custody fees, reporting, and servicing SLAs tied to Bank of America’s broader capabilities.
3. Understand counterparty relationships: Be aware of how Merrill’s integration with a large bank affects credit, liquidity, and product access.
Risks and considerations
– Legacy exposures: Historical losses from structured products highlight how product concentration can create system-wide risk.[Businesswire]
– Conflict of interest: Being part of a large bank can produce incentives to recommend internal products or banking services—ask about fiduciary standards and disclosures.
– Access and cost trade-offs: Digitalization reduces costs but can reduce personalized service for smaller clients. Know how that trade-off affects you.
– Regulatory and litigation risk: Large financial firms carry ongoing regulatory scrutiny and occasional litigation; stay informed through disclosures and statements.
Quick checklist before opening or keeping an account with Merrill
– Do I need an advisor or am I comfortable self-directed?
– What are minimum balances for advisor service and how are advisors paid?
– What are fees, commissions, and advisory costs?
– How are my assets custodied and protected?
– Are there conflicts of interest I should be aware of?
– If I have small accounts, is there a plan to consolidate or move them to a cheaper digital solution?
Conclusion
Merrill Lynch & Co. is the historic name behind today’s Merrill, a major wealth-management franchise within Bank of America. Its long history includes retail brokerage leadership and notable involvement in investment banking and structured products; the 2007–2008 crisis led to its acquisition by Bank of America and a reorientation toward scaled wealth-management services. Ongoing digitalization has prompted service and compensation changes that affect clients and advisors—especially smaller accounts—so it’s important to evaluate services, fees, and alternatives carefully.
Sources
– Investopedia: “Merrill Lynch & Co.” (source URL provided)
– Bank of America press release: “Bank of America Buys Merrill Lynch Creating Unique Financial Services Firm.”
– Businesswire: “Merrill Lynch Reports Full Year 2007 Net Loss from Continuing Operations of $8.6 Billion.”
– Financial Planning: “Merrill Lynch leaves pay grid unchanged, tightens small account policy.”
– Brokerage-Review.com: “Merrill Lynch Assets Under Management (AUM).”
If you’d like, I can:
– Produce a one-page checklist tailored to a retail investor with <$250k in investable assets, or
– Draft questions to ask a Merrill advisor before opening an advisory account, or
– Compare Merrill’s fees and services to two alternative brokers (e.g., Schwab, Fidelity). Which would be most useful?