Merrill and the Wealth MachineNarrow moat

Bank of America (BAC) — moat facet

Merrill is a $4.75 trillion wealth business fed by Bank of America's own checking customers.

Bank of America's second franchise is one it bought. Merrill Lynch was acquired in an all-stock deal worth approximately $50 billion that closed on 1 January 20091. Today Global Wealth & Investment Management, which combines Merrill Wealth Management and the Private Bank2, holds $4.75 trillion of client balances3 and produced $24,883 million of revenue and $4,670 million of net income in 20254.

GWIM revenue ($M)18,034201519,538201921,105202322,929202424,8832025Bank of America Forms 10-K, each year as reported; 2023-2025 current basis
Growing again after a flat decade.

The moat here is the same kind as the deposit franchise: accumulated relationships that are costly to move. A client with an adviser, a portfolio and years of tax history rarely changes firms. Assets under management received $81,997 million of net client flows in 20255.

What makes Bank of America's version distinctive is the connection to the consumer bank. The bank's checking customers can invest through Merrill Edge; consumer investment assets were $639.5 billion in June 20266. Those who build wealth can move up to Merrill advisers once they pass $250,0007.

The business has limits. Its net income margin, about 18.8% in 2025, is the lowest of the bank's four segments8, and its revenue moves with markets. Investment and brokerage services income was $19,956 million in 20259.

The two halves of the business are not equal. Merrill held $3,992,312 million of client balances at the end of 2025 and the Private Bank $759,082 million10. In the second quarter of 2026 the segment returned 26% on its allocated capital11, second only to Consumer Banking.

This is a narrow moat, widening as balances grow. The gauge is net client flows: a sustained fall while markets rose would mean the franchise was losing clients faster than the market was carrying it.

Moat trajectory: Widening

Client balances up 11.7% in 2025; AUM +17% in Q2 2026.

The number that tests this moat
Reported
GWIM pretax margin, latest quarter
27% (Q2 2026)

How much of wealth revenue the bank keeps; a fall would mean adviser pay was absorbing the growth.

Source: Bank of America Q2 2026 earnings release ↗
Aspects of the moat
DIG DEEPER 01
$4.75 Trillion of Client Balances
Merrill and the Private Bank look after $4.75 trillion, more than twice Bank of America's deposits.
DIG DEEPER 02
Eighty-Two Billion Dollars of Net Flows
Merrill adds about $82 billion of new money a year, under 2% of what it already holds.
DIG DEEPER 03
Merrill Edge Inside the Checking Account
Bank of America's 38.7 million checking accounts are a pipeline into Merrill that a standalone broker cannot build.
DIG DEEPER 04
Private Bank: $759 Billion for the Richest Clients
The Private Bank earns about the same on each dollar of client money as Merrill does, from a sixth of the balances.
⚠ Threats to the moat
⚠ THREAT 01
Fee Income Tied to the Index
Most of Merrill's revenue is a percentage of what markets are worth, so a bear market cuts it without a single client leaving.
⚠ THREAT 02
Growth Without Margin
Bank of America's wealth business grew revenue 18% in two years and kept exactly the same share of it as profit.
References
  1. Third-party estimateMerrill Lynch was acquired in an all-stock deal worth approximately $50 billion that closed on 1 January 2009.
    Wikipedia, Bank of America - corporate history (mergers and chief executives). — History · publ. 2026 · source ↗
  2. ReportedToday Global Wealth & Investment Management, which combines Merrill Wealth Management and the Private Bank, holds $4.75 trillion of client balances and produced $24,883 million of revenue and $4,670 million of net income in 2025.
    Bank of America Form 10-K for fiscal 2025 - business segment note and segment key statistics. — FY2025 · publ. 25 February 2026 · source ↗
  3. ReportedToday Global Wealth & Investment Management, which combines Merrill Wealth Management and the Private Bank, holds $4.75 trillion of client balances and produced $24,883 million of revenue and $4,670 million of net income in 2025.
    Bank of America Form 10-K for fiscal 2025 - business segment note and segment key statistics. — FY2025 · publ. 25 February 2026 · source ↗
  4. ReportedToday Global Wealth & Investment Management, which combines Merrill Wealth Management and the Private Bank, holds $4.75 trillion of client balances and produced $24,883 million of revenue and $4,670 million of net income in 2025.
    Bank of America Form 10-K for fiscal 2025 - business segment note and segment key statistics. — FY2025 · publ. 25 February 2026 · source ↗
  5. ReportedAssets under management received $81,997 million of net client flows in 2025.
    Bank of America Form 10-K for fiscal 2025 - business segment note and segment key statistics. — FY2025 · publ. 25 February 2026 · source ↗
  6. ReportedThe bank's checking customers can invest through Merrill Edge; consumer investment assets were $639.5 billion in June 2026.
    Bank of America second-quarter 2026 earnings release, Form 8-K exhibit 99.1 - segment results, returns on allocated capital and business highlights. — Q2 2026 · publ. 14 July 2026 · source ↗
  7. ReportedThose who build wealth can move up to Merrill advisers once they pass $250,000.
    Bank of America Form 10-K for fiscal 2025 - business segment note and segment key statistics. — FY2025 · publ. 25 February 2026 · source ↗
  8. Moat Explorer calcIts net income margin, about 18.8% in 2025, is the lowest of the bank's four segments, and its revenue moves with markets.
    Moat Explorer calculation from Bank of America's reported figures ($ millions unless stated). Deposits: cost of total deposits = interest on interest-bearing deposits / (average interest-bearing + average noninterest-bearing deposits): 2019 7,188 / 1,380,326 = 0.52%; 2021 537 / 1,914,286 = 0.03%; 2022 4,718 / 1,986,158 = 0.24%; 2023 26,163 / 1,887,541 = 1.39%; 2024 38,442 / 1,924,106 = 2.00%; 2025 34,513 / 1,984,182 = 1.74% (1,469,705 + 514,477 = 1,984,182, about $1.98 trillion). Average total deposits 2015 1,155,860; 2021 1,914,286; 2022 1,986,158 (about $1.99 trillion); 2015 to 2025 1,984,182 / 1,155,860 - 1 = 72%. Noninterest-bearing share 744,035 / 1,914,286 = 38.9% (2021); 514,477 / 1,984,182 = 25.9% (2025). Noninterest-bearing decline 751,470 - 514,477 = 236,993 (about $237 billion). JPMorgan comparison: deposit cost gap 1.80% - 1.74% = 0.06 points; 0.0006 x 1,984,182 = about 1,190 (about $1.2 billion). JPMorgan revenue per dollar of average deposits 182,447 / 2,506,565 = 7.3 cents; Bank of America 113,097 / 1,984,182 = 5.7 cents. JPMorgan year-end deposits 2,559,320 / 2,018,729 - 1 = 27%; revenue 182,447 / 113,097 - 1 = 61%; market value 935.79 / 391.80 = 2.4 times. Net income margin JPMorgan 57,048 / 182,447 = 31.3%; Bank of America 30,509 / 113,097 = 27.0%. Efficiency gap 61.65% - 52% = 9.65 points x 113,097 = about 10,914 (about $10.9 billion). Loans to deposits 1,185,700 / 2,018,729 = 58.7%. Uninsured deposits 723.0 + 134.9 = 857.9 billion; 857.9 / 2,018.7 = 42.5%; insured and other 2,018.7 - 857.9 = 1,160.8 billion. Consumer deposits per checking account 957.0 billion / 38.7 million = about $24,700. Securities: held-to-maturity unrealised loss as a share of common equity 108,596 / 244,800 = 44% (2022); 82,094 / 276,100 = 30% (June 2026). Held-to-maturity amortised cost 2021 674,591 - 2025 522,685 = 151,906 (about $152 billion); 2020 438,279 to 2021 674,591 = +236,312 (about $236 billion); 2021 fair value 665,890 - cost 674,591 = -8,701. Runoff time 505,828 / 34,794 = 14.5 years. Agency MBS share of loss 67,309 / 80,257 = 84%. Net interest income H1 31,742 / 29,113 - 1 = 9.0%. Capital: CET1 headroom (11.2% - 10.0%) x 1,792 billion = about 21.5 billion; 2027 minimum 4.5% + 3.5% + 2.5% = 10.5%. Capital returned 2025 (8.1 + 21.433) / 29.055 = 101% of net income to common. Average diluted shares 7,680.9 / 11,236.2 - 1 = -31.6%. EPS growth (3.81 / 1.31)^(1/10) - 1 = 11.3% a year. Price to tangible book 56.03 / 29.37 = 1.91. Revenue 2023 102,769 to 2025 113,097 = +10%. Compensation 42,346 / 69,727 = 61% of noninterest expense. Financial centers 3,530 / 3,664 - 1 = -3.7%. Noninterest expense Q2 2026 18,627 / 17,183 - 1 = 8.4%. Berkshire holding 483,394,015 / 1,032,852,006 - 1 = -53%. Investment banking fees Q2 2025 implied 2.1 / 1.5 = 1.4 billion. Segments (FTE, 2025): segment revenue 43,673 + 24,883 + 24,108 + 24,096 = 116,760; less All Other 3,054 = 113,706; less FTE adjustment 609 = 113,097. Shares of total FTE revenue: Consumer 43,673 / 113,706 = 38.4%; GWIM 24,883 / 113,706 = 21.9%. Shares of net income 30,509: Consumer 12,245 = 40.1%; Global Banking 7,793 = 25.5%; Global Markets 6,111 = 20.0%; GWIM 4,670 = 15.3%. Net income margins: Consumer 12,245 / 43,673 = 28.0%; GWIM 4,670 / 24,883 = 18.8% (2024 4,263 / 22,929 = 18.6%; 2023 3,947 / 21,105 = 18.7%); Global Banking 7,793 / 24,108 = 32.3%; Global Markets 6,111 / 24,096 = 25.4%. Consumer net interest income 35,309 / 43,673 = 81%; Consumer provision 4,649 / 5,675 = 82%. Growth 2023-2025: Consumer 43,673 / 42,031 - 1 = 3.9%; GWIM 24,883 / 21,105 - 1 = 17.9%; Global Markets 24,096 / 19,533 - 1 = 23.4%; Global Banking net income 7,793 / 10,072 - 1 = -23%. Consumer H1 2026 revenue 11,336 + 11,049 = 22,385. GWIM net interest income 7,197 / 24,883 = 29%. Revenue per dollar of year-end assets: Global Markets 24,096 / 1,032,858 = 2.3 cents; Consumer 43,673 / 1,039,346 = 4.2 cents. GWIM client balances 4,751,394 / 4,252,106 - 1 = 11.7%, increase 499,288; net flows 81,997 / 4,252,106 = 1.9%; consumer investment assets 639.5 / 599.1 - 1 = 6.7%. Revenue per dollar of balances: Private Bank 4,167 / 759,082 = 0.55%; Merrill 20,716 / 3,992,312 = 0.52%; Private Bank share of GWIM balances 759,082 / 4,751,394 = 16% and revenue 4,167 / 24,883 = 17%. Investment and brokerage services 19,956 / 17,766 - 1 = 12.3%. Common equity 277,251 / total assets 3,411,738 = 8.1%. AUM net flows 81,997 / 2,177,708 = 3.8%. Held-to-maturity loss 2023 97,994 / 263,249 = 37%. Share price 56.03 / 52-week high 65.23 - 1 = -14%. First half 2026 (Q1 + Q2): Consumer Banking revenue 11,049 + 11,336 = 22,385 and net income 3,060 + 3,281 = 6,341; Global Banking net income 2,087 + 2,046 = 4,133; Global Markets revenue 7,109 + 8,022 = 15,131 - segment shares, margins and growth. — 2015-2026 · publ. September 2026 · source ↗
    Method: Arithmetic on figures reported in Bank of America's Forms 10-K and 10-Q, earnings releases, JPMorgan's 10-K, Berkshire 13F tables and market data; operands shown in the source line.
  9. ReportedInvestment and brokerage services income was $19,956 million in 2025.
    Bank of America Form 10-K for fiscal 2025 - financial highlights, income statement, capital and shareholders' equity. — FY2025 · publ. 25 February 2026 · source ↗
  10. ReportedMerrill held $3,992,312 million of client balances at the end of 2025 and the Private Bank $759,082 million.
    Bank of America Form 10-K for fiscal 2025 - business segment note and segment key statistics. — FY2025 · publ. 25 February 2026 · source ↗
  11. ReportedIn the second quarter of 2026 the segment returned 26% on its allocated capital, second only to Consumer Banking.
    Bank of America second-quarter 2026 earnings release, Form 8-K exhibit 99.1 - segment results, returns on allocated capital and business highlights. — Q2 2026 · publ. 14 July 2026 · source ↗
Sources
Generated September 25, 2026