Bank of America Corp intends to put more global in its global wealth management division.
The largest U.S. commercial bank will expand its Merrill Lynch operations outside the United States, as emerging market economies generate the bulk of world's newly super-wealthy, wealth management chief Sallie Krawcheck said on Thursday.
In 2010, 70 cents of every dollar of new growth will come from emerging markets. Only 16 cents will come from the U.S., said Krawcheck, speaking to an audience of wealth advisers at a private client industry conference.
Krawcheck, long regarded as an independent voice on Wall Street, also said the brokerage industry needs to accept pending regulatory reform and closely examine itself to avoid past mistakes and better serve clients.
Bank of America, which snapped up Merrill Lynch in early 2009, plans to expand its largely domestic wealth operations into a small but fast-growing countries where the commercial and investment banking division does business.
Its really concentrating in countries that we can play a competent role, Krawcheck told reporters following her presentation to the Securities Industry and Financial Markets Association, or SIFMA.
Krawcheck played down the company's interest in expanding overseas through acquisition, and rather would focus on hiring and cultivating existing employees in those areas.
Simply put, wealth managers need to go to where the money is. Krawcheck noted the Asia-Pacific region will generate more high net worth clients than the United States by 2013. China is rapidly closing in on the United States as the country with the most billionaires.
RETIREMENT AND REFORM
The economic shift offsets the good news of a stronger-than-expected economic recovery, she cautioned.
Commodity market indexes have surged faster than in previous recoveries, she said, while housing and jobless figures appear to be improving.
If you squint, the world almost looks back to normal, she said. It sure looks like an un-muted recovery, said Krawcheck, a former all-star analyst and top Citigroup Inc executive who joined Bank of America last year.
But the recovery cannot mask what are tectonic shifts, she added, in the economy, financial markets, demographics and government regulation.
Krawcheck says brokerages, for example, face the challenge of handling 76 million baby boomers heading into retirement.
People are living longer, she notes, and aging brokerage customers have different ideas of what they want and need from financial advisers.
Merrill Lynch and other brokers need to do a better job of listening to clients and providing the service and attention they demand, she said, in order to stem the flow of assets and advisers away from the big brokerages toward hundreds of small independent advisory firms.
Krawcheck, alluding to the product make-over at Domino's Pizza, said Merrill executives have been crossing the United States to meet with focus groups of clients and identify areas to improve. Whereas brokers focus on investment performance, the clients were often more concerned with access, trust and plain English communication from their adviser.
Change also means embracing a higher fiduciary standard currently under debate in Congress, and offering more choice in how clients interact with brokers and pay for services.
(Reporting by Joe Rauch and Joseph Giannone, editing by Dave Zimmerman)