Global Wealth & Investment Management
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	Global Wealth & Investment Management Global Wealth & Investment Management Presentation Transcript

  • Growth Opportunities in Global Wealth & Investment Management Brian Moynihan President Global Wealth & Investment Management
  • Global Wealth & Investment Management is a division of Bank of America Corporation. Banc of America Investment Services, Inc.®, The Private Bank of Bank of America and Columbia Management are all affiliates within Global Wealth & Investment Management. Premier Banking & Investments TM is offered through Bank of America Premier Banking® and Banc of America Investment Services, Inc. Banking products are provided by Bank of America, N.A., member FDIC. Investment products: Banc of America Investment Services, Inc. is a registered broker-dealer, member NASD and SIPC, and a nonbank subsidiary of Bank of America, N.A. The Private Bank is a unit of Bank of America, N.A. Columbia Management is the primary investment management division of Bank of America Corporation. Columbia Management entities furnish investment management services and advise institutional and mutual fund portfolios. The Consulting Services Group is a division of Banc of America Investment Advisors, Inc. (BAIA). BAIA is an SEC-registered investment adviser and wholly-owned subsidiary of Bank of America, N.A. Ser Are Not FDIC Insured May Lose Value Are Not Bank Guaranteed 2
  • Global Wealth & Investment Management: Takeaways • We are a large and profitable competitor in attractive businesses and markets • Our competitive position and integrated model provides strong growth opportunities • Our best and most efficient way to grow is to leverage the strength of our franchise • We are capturing those growth opportunities, but there is much more ahead of us, and we are continuing to invest aggressively to capture it 3
  • A Sizeable and Profitable Competitor 2006 ($B) Percent change Revenue1 $7.8 6.3 Net income 2.4 3.8 Assets under mgt. 542.9 12.6 Total client assets 790.3 11.6 Average loans 61.5 13.7 Average deposits2 115.1 (1.9) Efficiency ratio 51.5% (0.8) Return on equity 23.2% 0.7 Associates 13,728 7.4 1Includes $851MM deposit NII on migrated balances 4 2Includes $48.4B of cumulative migrated average balances since 2004
  • 2006 Revenue Mix and Operating Margins Total Revenue by LOB Total Revenue by Product Other All Other Income Columbia 5% 6% Brokerage Loan NII 13% Management Premier Income 8% 20% Banking & Investments1 48% Asset Mgt Deposit NII Fees 36% 34% The Private Bank 27% Residual and Other NII 3% Line of Business 2006 Revenue 2006 Pre-tax margin Premier Banking & Investments $3.7B1 57.5% The Private Bank $2.1B 41.8% Columbia Management $1.5B 34.5% 1Premier Banking & Investments revenue shown as internally managed, including impact of migration 5 from Consumer Banking.
  • Peer Comparison: Profitability 4Q06 Pre-tax Earnings of Major Competitors $956 $759 $649 $625 $520 $361 $249 $242 BAC MER JPM C WB MS AMP NTRS Pre-Tax Margin 48% 23% 33% 23% 27% 17% 16% 31% Competitors listed include their respective GWIM-like businesses, based on Bank of America analysis of 6 publicly available earnings reports. Pro forma results reflect adjustments for significant acquisitions along with other one-time items, and eliminate SFAS 123R stock option expenses where necessary.
  • Trends in Asset Management Asset Management Fees ($MM) Assets Under Management ($B) 543 14% CAGR 517 11% CAGR 742 494 500 713 482 697 680 457 443 645 648 433 638 617 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 7
  • Trends in Loan, Deposit and Liquidity Balances Loans ($B) Deposits ($B) 120 118 CAGR 1% 119 14% 64 CAGR 62 116 115 114 114 60 114 59 57 55 53 51 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 Total BAC Liquidity1 Balance ($B) CAGR 2% 491.2 492.7 493.8 489.3 489.4 487.7 485.4 476.7 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 8 1Total liquidity balance includes deposits and Columbia retail money market funds
  • Trends in Brokerage Transactional/Fee-Based Revenue Brokerage Revenue ($MM) Net New Self Directed Accounts (000) 21.3 4% $617 10.3 $593 (0.2) (12.7) 1Q06 2Q06 3Q06 4Q06 2005 2006 Assets Under Management for all Fee-based Solutions and Accounts for Periods Ending 12/31 Accounts Assets ($B) (accounts) 35 100,000 30 80,000 25 20 60,000 15 40,000 10 20,000 5 0 0 2002 2003 2004 2005 2006 9
  • Our Go-to-market Model Mass Mass Very Mid-Market Large Wealthy Market Affluent Wealthy Institutions Institutions INVESTABLE ASSETS To $100K $100K - $3MM $3MM - $50MM $50MM Plus To $250MM $250MM Plus Banking, Integrated Wealth & Family Office, Investment & Asset NEED Borrowing, Banking & Legacy Investment Distribution Policy, Management Saving Investments Planning Consulting Trustee Services Excellence Deposits,Loans Plus… Plus… Plus… Foundation, Mutual Funds Charitable Giving PRODUCTS Straightforward Integrated Complex Trust Alternative asset Liquidity Investment Banking and mgt products Trustee Services Strategies Alternative Products Investment investments Philanthropic and Investment Separate Insurance Securities Foundation Consulting Accounts Specialty Asset Brokerage Services Management Retirement Simple Trust PTMS / PIMS Administration Consumer Premier Banking The Private Bank Family Wealth Columbia CHANNEL Philanthropic Banking & Investments Advisors Management Management Retirement Solutions 10
  • Growth Opportunities • Affluent households own 77% of personal investable assets in U.S., growing 26% (or 4x rate of U.S. population) from 2006-2010 – We are growing Premier Banking & Investments into the leading franchise in the underserved mass affluent market. • Wealthy households own 15% of personal investable assets in U.S., growing 36% (or 6x rate of U.S. population) from 2006-2010 – With current capabilities and addition of U.S. Trust, we create the largest private banking franchise in this fragmented market. • Columbia Management is well positioned on strong investment performance and strong retail/institutional distribution – Columbia Management is focused on taking greater share. 11
  • Leveraging the Strength of our Franchise • 8MM affluent customer relationships • Nearly 300,000 wealthy customer relationships • Relationships with 30,000 middle market institutions • Relationships with 80% of companies with pension assets of $200MM 12
  • Partnerships for Growth: Converted Client Referrals Why: • Best way to solve our clients’ needs Converted Client Referrals • Deepening relationships with existing clients represents best opportunity for 155,233 profitable growth 48% • Leverages strength of our franchise by generating referrals for all lines of business 104,879 What’s involved: • Goals and incentives in all lines of business • 46 local markets with GWIM leader • Personal and institutional client teams 2005 2006 drive teamwork across lines of business in each market • Integrated client management process 13
  • Investing Aggressively in Growth • People • Training • Technology • Marketing • U.S. Trust acquisition 14
  • Growth Opportunities in Premier Banking & Investments Pat Phillips President, Premier Banking & Investments 15
  • Premier Banking & Investments: Key Takeaways • Bank of America has invested heavily in a scaled model that satisfies affluent clients’ banking & investing needs • The business produces strong growth and profit, and deepens customer relationships • We will grow through increased productivity, sales force expansion and by leveraging the strength of our franchise 16
  • Mass Affluent Segment Who They Are What They Want Share of U.S. personal investable assets Consumer Advice High Net 9% Worth 15% Convenience 77% Respect Mass Affluent Total personal investable assets : $17.5T 17 Source:: IXI Xillionaires 2004-2005
  • How we Serve our Affluent Clients in PB&I Dedicated Teams of Client Managers and Financial Advisors • 4,400 professionals based in local markets nationwide Priority service • Premier Relationship Center • BAI Investment Centers • 1,200 professionals Convenience • 5,800 stores, 17,000 ATMs • No. 1 Online Banking • Leading Online Brokerage Relationship and Targeted Pricing • Mortgages • CD Rates • Money Market • $0 Online Equity Trades 18
  • Our Size, Scale and Market Position 4Q06 client balances Market position • Average deposits of $96.5B • Unique service model • Average loans of $32.1B • No. 1 affluent deposit market share • Total client brokerage assets of $187.7B • Highly rated online brokerage platform • Fee based assets of $18.6B • Integration with Consumer Banking Relationships With Mass Affluent Households Product penetration 8MM • 50% of Premier Banking & Investments customers obtain their first mortgage through Bank of America • 74% of Premier Banking & Investments customers obtain their home equity line / loan through Bank of America 1.4MM • Approximately 1/3 of Premier Banking 246K clients have an account with Banc of America Investment Services, Inc. Qualified Bank of Premier Only or Premier Banking & America Customers Investments Only Investments Combined Premier Brokerage 19
  • Improvement Achieved After Client Migration to PB&I 159% 60% Better 22% Better Better 8% Better Deposits Credit Growth Investment Growth Revenue Growth PB&I Test and Control Study of Premier Banking clients vs. similar Premier-eligible households 20 that remain in Consumer Banking; results based on two year period from April 2004 to July 2006
  • Delivering Growth Through Deeper Relationships… PB&I Client Balances1 ($B) PB&I Client Average Loan Balances1 ($B) CAGR 15% 285 244 32.1 20% 214 97 26.6 94 75 29 Deposits MM MF 15 20 Other Brokerage 159 124 131 4Q04 4Q05 4Q06 4Q05 4Q06 Premier Households with Brokerage Relationship 10% 246K 223K 21 1 Includes impact from Consumer migration 12/31/05 12/31/06
  • …and Increased Financial Advisor Productivity Premier Banking & Investments Loans & Deposits Referred to Bankers Investments Revenue by Financial Advisors $805 MM 51% 12% CAGR $7.1 B $4.2 B $720 MM $3.1 B 2005 2006 2004 2005 2006 Recurring Revenue as a Percentage of Fee Based Assets Under Management ($B) Investments Revenue 18.6 46% 49% CAGR 40% 13.7 27% 8.7 2004 2005 2006 2004 2005 2006 22
  • Growth Initiatives • Increased client contact leads to greater client delight • Improved productivity – Better use of technology – Improved client selection – Continued focus on partnerships • Expanded sales force 23
  • Percent of PB&I markets with organic deposit growth Two-Month Moving Average During 2006 70% 60% 50% 40% 30% 20% 10% Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 24
  • Growth Initiatives: Expand the Sales Force 5,940 5,581 770 Premier Relationship 5,087 798 Center 4,721 379 756 409 Investment Center 4,048 464 311 315 400 1,946 Financial Advisors 425 1,954 2,134 1,890 221 CRC Client Managers 2,048 75 Premier Client 2,345 2,624 Managers 1,812 2,126 1,175 2003 2004 2005 2006 2007 25
  • Premier Banking & Investments: Key Takeaways • Bank of America has invested heavily in a scaled model that satisfies affluent clients’ banking & investing needs • The business produces strong growth and profit, and deepens customer relationships • We will grow through increased productivity, sales force expansion and by leveraging the strength of our franchise 26
  • Growth Opportunities in Private Wealth Management Brian Moynihan President Global Wealth & Investment Management 27
  • Private Wealth Management: Key Takeaways • The Private Bank of Bank of America is positioned for stronger growth • The business becomes an even more powerful competitor combined with U.S. Trust • We will grow the business by leveraging the franchise and through more disciplined relationship management 28
  • Wealthy Segment Share of U.S. Personal Investable Assets Unique needs: Consumer • Wealthy clients want access to more specialized and High Net Worth 9% customized solutions 15% • 60% have relationships with at least five providers… but all want a primary advisor 77% • Business owners have Mass accumulated wealth faster than Affluent industry has adapted to serving them Total personal investable assets: $17.5Trillion1 29 1 Source: IXI Xillionaires 2004-2005
  • Combining Strengths to Form Leading Wealth Manager The New Private Wealth Management at Bank of America 118,000 client relationships 2,500 ultra wealthy client relationships $270 billion in assets under management $6B in alternative investments $16B in specialty asset management No. 1 private bank and No. 5 wealth manager* leadership across products, services offices in 32 states, including CA, CT, MA, NY strong brand awareness enormous growth potential Pending legal closing. The proposed acquisition is subject to regulatory approval and, until such acquisition is consummated, U.S. Trust Corporation and Bank of America Corporation will remain separate and competing parties. *Private Bank ranking reflects SEC Filings, Company 10Qs. Wealth Managers ranked by assets, based 30 on individual clients with accounts of $1MM or more, in Barron’s June 30, 2006.
  • Our Size, Scale and Market Penetration Client balances (2006) Products and services • Average deposits of $18.9B • Trust and wealth transfer services • Average loans of $31.2B • Liquidity management • Assets under management of $171.8B • Comprehensive investments • Brokerage assets of $28.3B • Credit expertise • Specialty asset management BAC Relationships With • Philanthropic services Wealthy Households • Family Wealth Advisors Facets of Life analysis 669,807 Market position • Largest private banking footprint in the U.S. with more than 150 locations • Leading private bank lender 295,227 • Leading manager of oil and gas properties • No. 1 trust provider in the U.S. 105,000 • No. 1 in foundation assets among U.S. banks • No. 1 manager of farm and ranch acreage Total BAC PB HNW in HNW Relationships BAC Clients Footprint 31
  • Improving Performance Before the Merger Loans ($B) Deposits ($B) CAGR 5% 32.3 26.9 31.4 25.7 30.4 30.5 30.7 30.1 29.6 29.6 20.8 20.0 18.6 18.6 18.6 18.6 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 Assets Under Management ($B) AUM Net Flows ($B) 171.9 3% CAGR (1.6) 166.6 166.0 165.1 (3.2) 164.6 164.0 163.7 162.9 (4.9) 2004 2005 2006 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 32
  • Growth Initiatives • Increase sales capacity Sales People 2,077 2,051 • Enhance client experience and 1,934 improve productivity – Client Management Process – Integrated desktop tool 2005 2006 2007 – Private Bank Relationship Center Client Delight • Deposits and liquidity (Top 2 Box Delight) 50% 40% • Alternative investments • Wealth transfer / business owners • Focused markets (exit International) 2005 2006 33
  • Private Wealth Management: Key Takeaways • The Private Bank of Bank of America is positioned for stronger growth • The business becomes an even more powerful competitor combined with U.S. Trust • We will grow the business by leveraging the franchise and through more disciplined relationship management 34
  • Growth Opportunities in Asset Management Keith Banks President, Columbia Management 35
  • Asset Management: Key Takeaways • Columbia Management is well positioned given its scale, breadth of products and strong investment performance • We will take share across asset classes by capitalizing on strong performance and more intensive distribution efforts • We will compete to win a greater share from Bank of America’s institutional clients • Our strategic focus is on alternatives, international and retirement solutions to drive longer term growth 36
  • Columbia Management Assets under management: $543B (as of 12/31/06)1 Total Assets Under Management ($B) 26th largest asset manager globally2 Columbia Management and Affiliates 15th largest U.S. based asset manager2 8th largest U.S. mutual fund family3 CAGR 10% 6th largest global money fund manager4 600 $543 AUM By Client Segment (As of 12/31/06) 500 $482 $451 208 400 184 154 28% 27% 300 87 High Net Retail 96 83 Worth 200 100 215 248 201 45% Institutional 0 2004 2005 2006 Equity Fixed Income Money Mkt/ Other Columbia Management and its affiliates (quot;Columbia Managementquot;) :Columbia Management and its affiliates comprise the wealth and investment management division of Bank of America Corporation. As of September 30, 2006, Columbia Management and its affiliates managed assets of $517 billion. Columbia Management and its affiliates managed assets consists of assets under the discretionary management of the three registered investment advisors, Columbia Management Advisors, LLC ($331.4 billion), Columbia Wanger Asset Management, L.P. ($30.3 billion) and Marsico Capital Management, LLC ($76.3 billion); the Bank of America Private Bank; Banc of America Investment Services, Inc.; Banc of America Investment Advisors, Inc.; Bank of America Capital Advisors, LLC, and Premier Banking & Investments. 2Ranked by worldwide AUM as of 12/31/05, according to Pension & 37 Investments, 5/29/06 3Source: Strategic Insight, 12/31/06; 4) Source: iMoneyNet,12/31/06
  • Integration Highlights • Reduced number of retail mutual funds by more than 30% • Consolidated 6 fixed-income product centers into 2 • Consolidated core vendors providing services • Returned more than $200 million in savings to mutual fund shareholders through reduced expense ratios, since 2005 38
  • Investment Performance in Fixed-Income and Money Market Percentile Rankings for Taxable Fixed-Income & Money Market Funds based on 3-Year Performance Taxable Fixed-Income Funds Money Market Funds 16th percentile 38th percentile Columbia Taxable Fixed-Income Funds combined average ranking: 38.5th percentile when compared to industry competitors. Source: Columbia Management based on Morningstar data. Mutual Fund complexes with at least $3 B in assets and 5 taxable fixed income funds. Rankings include taxable fixed income funds thru 12/31/06 Columbia Money Market Funds combined average ranking: 16th percentile when compared to industry competitors. Source: iMoneyNet; Money Fund Complexes with at least $10 B in assets and 7 money market funds with similar investment categories as Columbia Management (account performance is simple weighted) thru 11/30/06 39
  • Stronger Performance, Stronger Sales Intermediary Net Sales ($B) 3-year CAGR 194% Institutional Short Term Net Sales ($B) $13.8 $10.2 $10.3 $1.4 2005 2006 $1.6 2004 2005 2006 Institutional Long Term Net Sales ($B) Intermediary sales rank of 173 wholesale complexes1 ($8.6) ($0.6) 1. American Funds 2. Franklin Templeton Investments 3. Oppenheimer Funds, Inc. 4. State Street Global Advisors 2005 2006 5. Columbia Management 40 1 Ranked by 2006 LT and ETF AUM, source: FRC
  • How we Realize Additional Growth Equity get our fair share across breadth of product portfolio Fixed Income take it to a higher level and grow assets Cash build upon our considerable strength Plus, greater penetration of Bank of America institutional franchise 41
  • Increase Share With Existing Bank of America Clients U.S. corporations with pension assets of $200MM or more hold $2.9T in assets 80% are Bank of America clients Columbia Management share is < 3% 42
  • How We Realize the Opportunity • Hired new head of distribution • Rebuilding the sales team • Broadening consultant advisory team • Aligning ourselves with Client Management Process in GCIB 43
  • Columbia Management Long Term Strategic Initiatives Alternatives International Retirement 44
  • Asset Management: Key Takeaways • Columbia Management is well positioned given its scale, breadth of products and strong investment performance • We will take share across asset classes by capitalizing on strong performance and more intensive distribution efforts • We will compete to win a greater share from Bank of America’s institutional clients • Our strategic focus is on alternatives, international and retirement solutions to drive longer term growth 45
  • Global Wealth & Investment Management: Summary • We are a large and profitable competitor in attractive businesses and markets • Our competitive position and integrated model provides strong growth opportunities • Our best and most efficient way to grow is to leverage the strength of our franchise • We are capturing those growth opportunities, but there is much more ahead of us, and we are continuing to invest aggressively to capture it 46