Merrill Lynch & Co.: Overview, History, Recent Changes

What Is Merrill Lynch & Co.?

Merrill Lynch & Co. is the former name of a prominent Wall Street investment firm. Since its acquisition by Bank of America (BAC) in 2009, it has become known simply as “Merrill” and operates as a wealth management division of Bank of America.

Founded by Charles E. Merrill in 1914, Merrill Lynch & Co. has long been one of the American financial sector's iconic institutions.

Understanding Merrill Lynch & Co.

Today, Merrill Lynch & Co. is headquartered at 250 Vesey Street in Manhattan, New York. Part of Bank of America, the firm holds assets under management (AUM) of over $2.75 trillion and employs over 19,000 financial advisors.

While today it is focused on its wealth management business, Merrill Lynch & Co. is recognized for its investment banking activities. In June 1971, Merrill Lynch & Co. completed its initial public offering (IPO) and began trading on the New York Stock Exchange (NYSE).

During the early 2000s, Merrill Lynch & Co. became a leader in the market for mortgage-backed collateralized debt obligations (CDOs) following its acquisition of the subprime lending firm First Franklin Financial in 2006. 

Bank of America and Merrill Lynch & Co.

The company became the subject of widespread concern during the 2007 to 2008 financial crisis. In November 2007, Merrill Lynch & Co. announced billions in losses related to its portfolio of subprime mortgages and related derivative products. Following the termination of its chief executive officer (CEO), the company began selling company assets in a bid to maintain its solvency amidst speculation that it was on the verge of collapse.

In September 2008, Bank of America proposed a takeover of Merrill Lynch & Co. with an offer value of over $40 billion. This takeover offer, which represented a premium of over 70% relative to the company’s then-depressed market price, was accepted shortly thereafter, and Bank of America ultimately acquired Merrill Lynch for a $50 billion all stock transaction.

Merrill Lynch Changes Due to Digitalization

According to Financial Planning, the company plans to cut payouts to its advisors that manage small account holders in 2021 in an effort to maintain stability. Advisors will not receive a payout for production credits generated in households under $250,000.

This change echoes a trend among the biggest brokerage firms, which are encouraging advisors to cater to larger clients and move smaller accounts to robo-advisors or self-directed platforms.

This action is a reflection of the digital transformation that has occurred in the fintech sector. A senior Merrill executive stated: “That [shift] really reflects where our business is today and where it is going.”