Bank of America has made at least 45 hires this year for an aggressive push into a red-hot wealth business where rival Morgan Stanley has a head start

  • Bank of America is building out a team of specialists with an eye on pushing further into the competitive world of benefits offerings for other companies' employees. 
  • This year, the firm has hired 45 employee benefits specialists, many of whom are industry veterans, and now has a team of 69 such specialists who work with bankers and Merrill Lynch financial advisers.  
  • The bank earlier this year officially launched a workplace benefits program that gave it a foothold in a space where rival bank and wealth manager Morgan Stanley has entered aggressively. 
  • For firms like them, offering products like 401(k) plans and healthcare savings accounts can create paths to lock in customers who can later become lucrative wealth clients.
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Bank of America is muscling into the competitive world of managing benefits for corporate clients' employees, an area that rival Morgan Stanley has invested in aggressively over the last year. 

It's a boring-but-stable area that banks are piling into. Bank of America fully rolled out a new program in February that's geared toward providing other companies' employees benefits like healthcare savings, 401(k) accounts, equity compensation plans, and other products. 

The firm is quickly growing out its team to support its push into overseeing benefits for other companies' employees, which can be lucrative for banks as they can draw customers into other investment products and services, like its Merrill Lynch Wealth Management arm, over time. 

"After years of learning and getting better at really understanding how we can help a company, it's a combination of the bundling of all these things tied together when you're having discussions with the senior leadership of a company — but then how we deliver things both digitally and physically," said Aron Levine, the head of consumer banking and investing. 

This year, Charlotte-based Bank of America has hired 45 employee benefits specialists, many of whom are industry veterans. It has hired longtime retirement experts from insurance companies and asset managers including TIAA, Lincoln Financial Group, and John Hancock Financial Services, including at least five veteran specialists from Invesco.

It now has a team of 69 such specialists who work with banking relationship managers and Merrill Lynch financial advisers. 

Ultimately, there will be some 100 specialists in total who will provide full coverage for bankers and financial advisers. A spokesperson said there was no concrete headcount figure it was targeting this year.

As the unit — called Financial Life Benefits — grows, the firm will continue adding staff on an as-needed basis, like in relationship management, operations, and other areas, a spokesperson said. 

"We view the workplace as one more powerful opportunity for growth for the wealth management franchise," Andy Sieg, the president of Merrill Lynch, said during a discussion at a virtual conference held by Deutsche Bank in May. 

The wealth business, which managed some $2.4 trillion in client assets as of late June, is looking to mesh benefits tools with "the broader digital platforms of the company, and you'll be seeing more around that soon," Sieg said.

Workplace benefits, meet wealth management

As companies stay private for longer periods, growing the focus on equity compensation plans that serve high-flying startups' employees who are building their wealth, banks see an opportunity to go after that group. 

That thinking was on full display last year when Morgan Stanley bought Solium Capital, later re-named Shareworks by Morgan Stanley, for $900 million to secure a foothold in that market.

The firm added 525 new corporate clients between the acquisition's announcement in early 2019 through the second quarter, according to a transcript of Morgan Stanley's latest earnings call in July on the investment research platform Sentieo. It's added 180 new clients this year, Chief Finance Officer Jon Pruzan said. 

Read more:Greg Fleming's $43 billion Rockefeller Capital has hired 19 adviser teams from top wealth firms in 7 months. Execs lay out where it's focused next.

A spokesperson declined to specify the number of corporate clients and employees Financial Life Benefits serves, or the size of the technology investment Bank of America made to bring Financial Life Benefits together. 

Within Merrill Lynch, more than 3,300 financial advisers are certified to work with the suite of offerings. The wealth manager has 17,888 wealth advisers, which include full-service financial advisers and professionals working on other products, like Merrill Edge; it no longer discloses financial adviser headcount.

The newly centralized internal push in offering workplace benefits is already moving existing clients to new products, said Lorna Sabbia, the firm's head of retirement and personal wealth solutions, in a recent phone interview.

For instance, some existing corporate clients now have health savings programs for their clients through Bank of America, too. 

A competitive, crowded arena 

The competition for adding new clients under a dedicated benefits umbrella highlights how competitive legacy wealth management firms have to stay to maintain an edge against new entrants — and each other. 

To stay ahead and offer new services and products that could draw in and keep a new generation of customers, firms have embraced industry buzzword "financial wellness" to describe moving beyond a bank or wealth manager's mere financial relationship and into many aspects of a client's life.

Last December, E-Trade paid $30 million for Gradifi, a student loan provider, which adds additional tools and products to the brokerage's stock administration plan business.

When Morgan Stanley said in February that it would buy discount brokerage E-Trade in a deal set to close later this year, analysts and people familiar with the deal said part of the appeal for the New York investment bank was E-Trade's stock plan administration unit. 

"Moving forward, financial wellness is moving out of the workplace to encompass services beyond traditional wealth management, such as paying off debt, helping clients find a qualified caregiver, providing elder care support, or helping with financial crisis management," Dennis Gallant, a senior analyst at the Aite Group, an industry research firm, wrote in a report published earlier this year. 

Read more: 

  • LEAKED MEMO: Bank of America sent 3.2 million mistaken emails about fraud claims to customers including Merrill Lynch and private bank clients, sparking a surge in calls from worried customers
  • Merrill Lynch has restarted hiring for its ultra-competitive 3,000-person financial advisor trainee program after hitting pause for months amid the pandemic

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