BofA Leans on Merrill Edge Offerings with More Financial Advisors

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Bank of America (NYSE:BAC) recently announced its decision to hire more than 160 financial solutions advisors (FSAs) in Southern California and Arizona. ((Bank of America to Hire More Than 160 Financial Solutions Advisors Throughout Southern California and Arizona, Bank of America Press Release, Dec 12 2011)) The newly hired FSAs will bulk up the bank’s Merrill Edge service offerings, bringing the total number of Merrill Edge FSAs in the region to above 250 by the end of Q1 2012. Bank of America has also appointed new Merrill Edge regional leaders who will be responsible for ensuring a smooth integration of the large addition to its employee pool. Banks are justifiably showing renewed interest in wealth management services at a time when investment banking services are no longer generating substantial revenues. Competitors Citigroup (NYSE:C), Barclays (NYSE:BCS) and UBS (NYSE:UBS) have all announced or made significant changes to their wealth management offerings in the recent past.

We maintain a $9 price estimate for Bank of America’s stock and believe that the significant premium over its current market prices can be attributed to the widespread pessimism among investors toward banking stocks in general, and Bank of America in particular, in the wake of the deteriorating European debt crisis.

See our full analysis for Bank of America’s stock

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Merrill Edge is Well-Poised to Gain in these Troubled Times

Bank of America has received positive response for its Merrill Edge offering since its launch last year. Merrill Edge combines investing and banking services for customers with investable assets between $50,000 and $250,000, and Bank of America seeks to leverage its huge customer base to cross-sell this offering.

In a recent report, the bank announced that these customers – whom it refers to as preferred customers – represent the fastest-growing segment. Moreover, the current economic slowdown has prompted more such customers to seek out investment and financial advice, largely increasing revenue-generation potential from this customer segment.

The proposed addition to its Merrill Edge FSA strength is indeed a step in the right direction. What is yet to be seen is how efficiently Bank of America taps the potential market and adds it to its top-line numbers.

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