Bank of America’s CEO sees a ‘huge opportunity’ in the U.S. wealth business

The banking giant (No. 17 on the Fortune 500) hosted its first investment day since 2011 on November 5 in Boston. Executives set ambitious goals for the wealth unit: 4% to 5% net new asset growth at Merrill Wealth Management over the next three to five years, revenue growth roughly twice the rate of expenses, with the target return on committed capital rising to 30% for the entire segment.

“There is a huge opportunity in the US wealth sector,” CEO Brian Moynihan told reporters during a roundtable session on Wednesday. He added that the United States has more than 20 million millionaires, including about 6 million in China.

The United States is on the cusp of the “Great Wealth Transfer” — a generational shift that is expected to transfer between $84 trillion and $124 trillion from baby boomers to heirs and charities by the mid-2040s, fundamentally reshaping financial services and households.

Bank of America and other major banks such as JPMorgan Chase and Citigroup are expanding their wealth management operations – competing to retain assets and attract new clients among millennials, Gen Z, and high-net-worth households, especially those seeking value-based investing and advanced digital tools.

Bank of America claims a 14% market share of the ultra-high net worth segment. “Our national footprint covers 90% of wealth opportunities,” Katie Knox, president of Private Bank of America, said at the event. “We are allocating resources to capture it,” she said. Knox also noted that the bank is investing heavily to grow its advisor base.

“Our model combines institutional strength with a personal, local approach,” said Lindsay Hanes, co-president of Merrill Wealth Management. The joint advisory force numbers about 15,000 individuals. Recruitment is key to organic growth, she said, and is supported by a consultant development program that moves new hires from basic skills to advanced roles.

“The training program is as large as most other companies in this field,” Moynihan told reporters. “It takes a lot of energy, talent and ability to succeed.”

While banks compete aggressively for wealth advisors, Moynihan noted that advanced technology such as artificial intelligence, which is more attractive to young professionals, could boost talent acquisition at Bank of America.

He explained that advisors spend a lot of their time developing clients and building relationships, especially at the beginning of their careers. “They have to create a book, then develop that book,” he said, adding that artificial intelligence can speed up that process.

For example, Merrill’s Advisor Match software uses artificial intelligence to connect clients with advisors best suited to their needs, analyzing preferences and advisor profiles to streamline referrals and improve matching accuracy.

Bank of America raised its medium-term target for return on tangible common equity (an indicator of how effectively the bank is using its tangible assets) to 16% to 18% over the next three to five years, up from its previous guidance of “mid-teens.” It posted ROTCE (return on tangible common equity) growth of 15.4% in the third quarter, compared to 20% at JPMorgan.

KBW analyst Christopher McGroty reiterated his outperform rating for Bank of America, noting that the bank’s new medium-term ROTCE target of 16% to 18% is in line with analyst expectations.