What Is Merrill Lynch & Co.?
Merrill Lynch & Co. is the former name of a prominent Wall Street investment firm. Since its acquisition by Bank of America (BAC) in 2009, it has become known simply as “Merrill” and operates as a wealth management division of Bank of America.
Founded by Charles E. Merrill in 1914, Merrill Lynch & Co. has long been one of the American financial sector's iconic institutions.
Key Takeaways:
- Merrill Lynch & Co. is a long-established American financial firm.
- It was acquired by Bank of America in 2009 in the wake of the 2008 financial crisis.
- Prior to its acquisition by Bank of America, the company was a leading player in the subprime mortgage market, which collapsed in 2007.
Understanding Merrill Lynch & Co.
Today, Merrill Lynch & Co. is headquartered at 250 Vesey Street in Manhattan, New York. Part of Bank of America, the firm holds assets under management (AUM) of over $2.75 trillion and employs over 19,000 financial advisors.
While today it is focused on its wealth management business, Merrill Lynch & Co. is recognized for its investment banking activities. In June 1971, Merrill Lynch & Co. completed its initial public offering (IPO) and began trading on the New York Stock Exchange (NYSE).
During the early 2000s, Merrill Lynch & Co. became a leader in the market for mortgage-backed collateralized debt obligations (CDOs) following its acquisition of the subprime lending firm First Franklin Financial in 2006.
Merrill Lynch & Co. gradually expanded its service offerings by acquiring and merging with various other firms. The company has been engaged in retail brokerage services, prime brokering, broker-dealer activities, and commodities trading, among others.
Bank of America and Merrill Lynch & Co.
The company became the subject of widespread concern during the 2007 to 2008 financial crisis. In November 2007, Merrill Lynch & Co. announced billions in losses related to its portfolio of subprime mortgages and related derivative products. Following the termination of its chief executive officer (CEO), the company began selling company assets in a bid to maintain its solvency amidst speculation that it was on the verge of collapse.
In September 2008, Bank of America proposed a takeover of Merrill Lynch & Co. with an offer value of over $40 billion. This takeover offer, which represented a premium of over 70% relative to the company’s then-depressed market price, was accepted shortly thereafter, and Bank of America ultimately acquired Merrill Lynch for a $50 billion all stock transaction.
Merrill Lynch Changes Due to Digitalization
According to Financial Planning, the company plans to cut payouts to its advisors that manage small account holders in 2021 in an effort to maintain stability. Advisors will not receive a payout for production credits generated in households under $250,000.
This change echoes a trend among the biggest brokerage firms, which are encouraging advisors to cater to larger clients and move smaller accounts to robo-advisors or self-directed platforms.
This action is a reflection of the digital transformation that has occurred in the fintech sector. A senior Merrill executive stated: “That [shift] really reflects where our business is today and where it is going.”
FAQs
Oftentimes when advisors speak with consultants, they are so exhausted with all the red tape that they simply want a way out as fast as can be arranged. Clients are advised to brace for a shift towards automation and interactions with artificial intelligence as the firm embarks on a digital trajectory.
What was the downfall of Merrill Lynch? ›
Subprime mortgage crisis. In November 2007, Merrill Lynch announced it would write-down $8.4 billion (~$11.9 billion in 2023) in losses associated with the subprime mortgage crisis, and terminated E. Stanley O'Neal as its chief executive.
What is happening to Merrill Lynch? ›
Merrill Lynch & Co. is the former name of a prominent Wall Street investment firm. Since its acquisition by Bank of America (BAC) in 2009, it has become known simply as “Merrill” and operates as a wealth management division of Bank of America.
Why did Bank of America drop the Lynch from Merrill Lynch? ›
The change comes as Bank of America is working to boost morale in its investment bank after a year of declining market share and revenue and a string of departures by senior leaders.
Who is Merrill Lynch's biggest competitor? ›
Merrill Lynch Ranks 6th in Pricing Score
| Rank | Company | Score |
|---|
| 1 | The Vanguard Group | 71 |
| 2 | Goldman Sachs | 71 |
| 3 | UBS | 68 |
| 4 | Morgan Stanley | 67 |
2 more rowsThat fell to a net decline of 703 financial advisors in 2022 and, last year, to a drop of 445, or less than half the amount seen two years earlier. At the end of last year, Merrill Lynch reported a total of 18,916 client-facing financial advisors across its various business models.
What is the Merrill controversy? ›
Alleged Failure to Disclose Production Credit Fee for Wrap Accounts. On April 3, 2023, the SEC alleged that Merrill Lynch failed to disclose a fee called a “production credit” associated with wrap accounts. These undisclosed fees allegedly totaled approximately $4.1 million across 4,874 advisory accounts.
What is the new name for Merrill Lynch? ›
In addition, Bank of America will dump the name Merrill Lynch from its investment bank and trading operations and keep just “Merrill” as the brand for its wealth management division.
What is the lawsuit against Bank of America Merrill Lynch? ›
The lawsuit alleges that African American advisers employed by Bank of America-owned Merrill received less compensation and promotions than their white counterparts — and were terminated at higher rates than their white colleagues, with fewer advancing to more senior roles.
Is your money safe with Merrill Lynch? ›
As a commitment to our clients' account security, we are offering this guarantee: We will reimburse you for quantifiable monetary losses that occur in any of your Merrill accounts due to unauthorized, third-party activity.
Merrill is a good company if you're looking for an established financial advisor to help create and implement a plan to meet your financial goals. Whether you're looking for guidance on investing or selling a business, Merrill can help with various levels of service and options for both in-person and online advising.
Is Merrill Lynch a good financial company? ›
At Merrill, our advisors are among the most recognized in the industry. In fact, Merrill had the most advisors listed on the 2024 Forbes “America's Top Next-Generation Wealth Advisors” list. Published on August 8, 2024. Rankings based on data as of March 31, 2024.
What was the Merrill Lynch scandal? ›
Two years later, Merrill Lynch entered into a $42 million settlement with the SEC following allegations that the firm “falsely informed customers that it had executed millions of orders internally when it actually had routed them for execution at other broker-dealers.” In connection with this scandal, the SEC found ...
Who owns Merrill Lynch now? ›
Merrill Lynch, Pierce, Fenner & Smith Incorporated (also referred to as “MLPF&S” or “Merrill”) is a registered broker-dealer, registered investment advisor, Member SIPC and wholly owned subsidiary of BofA Corp. Meet all of the finalists and winners at ThinkAdvisor.com.
What was the failure of Merrill Lynch? ›
Merrill Lynch did not go out of business after it was bought by Bank of America. However, Merrill Lynch did experience significant financial losses during the 2008 financial crisis and was acquired by Bank of America in a deal that was completed on January 1, 2009.
Why is Merrill Lynch losing advisors even as business booms? ›
They pointed to a combination of Merrill's changing culture and the growing opportunities for advisors to strike out on their own as reasons for leaving. The Bank of America deal was more than a decade ago, and experienced Merrill advisors have for years been jumping ship.
Who is better fidelity or Merrill Lynch? ›
Overall, Fidelity is the lower-cost brokerage, while Merrill Edge combines banking tools with trading. The result is that Fidelity operates with less fees and offers more research tools. 🏆 Winner: Fidelity has a better platform for investors when it comes to account fees, margin rates, and commissions.
