CHARLOTTE, N.C. – Bank of America Corp., the second-largest U.S. lender, attracted record new assets last year to its unit-servicing retirement and other employee-benefit plans as it cross-sold products through the commercial bank, Bloomberg News reported Tuesday.
The company saw $24.3 billion in new assets, a 28 percent increase from a year earlier, said Kevin Crain, head of institutional retirement and benefit services at Bank of America Merrill Lynch. Assets from clients who had an existing relationship with the global commercial bank more than doubled to $10.6 billion from $5 billion in 2011.
The nation’s largest banks, including Charlotte, N.C.-based Bank of America and New York-based JPMorgan Chase & Co., have been trying to win more of the $3.5 trillion that Americans held in 401(k) retirement plans as of September. They’re competing with traditional account managers such as mutual-fund firms Fidelity Investments and Vanguard Group Inc.
“It is critically important for the bank overall to have a robust retirement business,” Crain said in an interview. “It’s the starting place for many employees and individuals toward their long-term financial security.”
Bank of America’s new-asset figures include 401(k)s it administers as well as defined benefit, deferred compensation and stock-award plans. The firm sold 5,998 plans of which about 96 percent, or 5,773, were 401(k)s.
“The highest-selling product in terms of extending the relationship has been the 401(k),” said Bob Arth, regional executive for the global commercial bank.
Bank of America has been trying to expand its retirement business since its 2009 acquisition of Merrill Lynch by selling to clients of the commercial bank, which usually serves companies with annual revenue of $50 million to $2 billion.
Cross-selling has been a strategy for banks since the 2008-2009 financial crisis, said Sophie Schmitt, a senior analyst at the financial research firm Aite Group based in Boston.
“It’s been the strategy, laser-like focus, post-crisis when banks really have been scrambling to try and find new sources of revenue,” Schmitt said.
The bank offers a proprietary product for record-keeping plans with $10 million or more and partners with other administrators to service and receive revenue from smaller firms, Crain said. Last year it also started providing investment consulting to plans. It doesn’t manage investments within 401(k) plans.
The largest provider of 401(k)-type plans is Boston-based Fidelity, which administered $949 billion in assets as of 2011, according to the latest data from Cerulli Associates. Bank of America Merrill Lynch ranked 12th, with $96.8 billion in record- keeping assets, Cerulli data shows.