BofA to push institutional retirement advice
CHARLOTTE, North Carolina
CHARLOTTE, North Carolina (Reuters) - Bank of America Corp wants to aggressively expand Merrill Lynch's business of managing investments on behalf of pension funds, foundations and endowments, a senior bank executive told Reuters Friday.
The largest U.S. commercial bank is increasing its focus on the institutional wealth management business, broadening its reach to corporate clients and nonprofits from Merrill's traditional strengths serving individual investors.
"We want the (institutional) business to be multiples of what it is today," Andy Sieg, head of Bank of America's retirement and philanthropy business, said in an interview. "We're not thinking 5 to 10 percent growth."
On Thursday, Bank of America said Chris Dupuy will serve as head of institutional investments and philanthropic solutions, a new position overseeing investment advisory and services for a range of clients.
While institutional and philanthropic businesses will still be overseen by their respective divisions, Dupuy will have ultimate control over both units, reporting directly to Sieg.
The combined division will be courting pension funds, foundations and endowments with $500 million or less in total assets. That market totals $2 trillion in potential client assets, Sieg said.
In the wake of the 2008 financial crisis, Sieg said foundations, pensions and other clients are looking to outsource their advisory and investment management services.
"They're clearly looking to professionalize investment management, almost chief investment officer-like outsourcing," he said.
Sieg said his division is hiring, although he declined to discuss specific goals. The bank has 60 advisers who hold institutional advisory certifications, a number Sieg intends to grow by training Merrill advisers and recruiting from other firms.
Sieg's division manages roughly $450 billion in client assets.
Reporting to Dupuy are Paul Cummings, head of institutional advisory, and Cary Grace, head of national philanthropic management.
Merrill Lynch's institutional advisory business suffered a black eye five years ago as the subject of an extended U.S. Securities and Exchange Commission probe. The 2005 investigation centered on allegations Merrill failed to disclose potential conflict of interests with pension clients.
The Merrill Lynch settled the matter with the SEC on January 30, 2009, a few weeks after the Bank of America completed its takeover of Merrill Lynch, but before the integration of the two firms began. Merrill paid a $1 million in the settlement.
Sieg, a Smith Barney employee until last year, said the pension probe and settlement have "not been a factor in our conversations with clients and have not been for some time."
(Reporting by Joe Rauch; editing by Andre Grenon)
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