What Is Merrill Lynch & Co.?
Let me tell you about Merrill Lynch & Co.—it's the former name of a major Wall Street investment firm that you've probably heard of. Since Bank of America acquired it in 2009, it's now just called 'Merrill' and functions as their wealth management division.
Charles E. Merrill founded it back in 1914, and it's been one of the key players in America's financial world ever since.
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, you'll find Merrill Lynch & Co. headquartered at 250 Vesey Street in Manhattan, New York. As part of Bank of America, it oversees more than $2.75 trillion in assets under management and has over 19,000 financial advisors on staff.
While its current focus is on wealth management, you should know it's well-known for its investment banking work. Back in June 1971, it went public with an IPO and started trading on the New York Stock Exchange.
In the early 2000s, Merrill Lynch became a big name in mortgage-backed collateralized debt obligations after buying the subprime lender First Franklin Financial in 2006.
Over time, Merrill Lynch expanded by acquiring and merging with other firms. It's been involved in retail brokerage, prime brokering, broker-dealer activities, commodities trading, and more.
Bank of America and Merrill Lynch & Co.
The firm drew a lot of attention during the 2007-2008 financial crisis. In November 2007, it reported billions in losses from its subprime mortgages and derivatives. After firing its CEO, it started selling assets to stay afloat amid rumors of collapse.
Then, in September 2008, Bank of America stepped in with a takeover offer worth over $40 billion—a 70% premium on the stock's low price at the time. The deal closed as a $50 billion all-stock transaction, and that's how Merrill became part of Bank of America.
Merrill Lynch Changes Due to Digitalization
Looking at recent moves, according to Financial Planning, Merrill plans to cut payouts to advisors for small accounts in 2021 to keep things stable. Specifically, advisors won't get production credits for households under $250,000.
This is part of a broader trend among top brokerage firms: pushing advisors toward bigger clients and directing smaller ones to robo-advisors or self-service options.
It's all about the digital shift in fintech. A senior exec at Merrill put it this way: 'That [shift] really reflects where our business is today and where it is going.'
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