Bank of America Corporation (NYSE:BAC) Morgan Stanley Financials Conference June 12, 2019 8:00 AM ET
Andy Sieg - Head of Merrill Lynch Wealth Management
Conference Call Participants
Betsy Graseck - Morgan Stanley
All right. Thanks, everybody, for joining us on day two on 10th Annual Morgan Stanley Financials Conference. We're going to kick off with polling question on Bank of America before I introduce Andy Sieg. So, if you could get your clickers.
Bank of America, other than rates, what do you think will be the biggest driver for Bank of America stock over the next year? A, loan growth; B, capital markets growth; C, expense management; D, credit; E, capital return. So, just give us a sense of what you think is going to be the biggest driver for the shares other than rates over the next year.
And we have capital return and capital markets growth.
Okay. Let's go to the next question. Which is likely to be the biggest driver for Bank of America's wealth management business over the next year? Rates, fees, asset growth, FA headcount or pretax margins? This is a little warmup question here. Andy did vote. I saw him push the button. Okay. Client asset growth, all right.
So, thanks again for joining us this morning. We are very pleased to have with us this morning, Andy Sieg, President of Merrill Lynch Wealth Management. Andy has been in the industry since 1992 and has been with Bank of America since the acquisition of Merrill back in 2009 and he has been running the business since 2017, but, obviously, heavily involved for quite some time. He oversees, what is it, 14,700 FAs and $2.3 trillion in client balance.
So, Andy is going to give us a brief presentation and then we're going to go into Q&A. So, Andy, thanks very much for joining us.
Good morning, everyone. It's great to be here. Betsy, thank you. It's a real pleasure to talk about this business. As Betsy said, I lead Merrill Lynch Wealth Management. I also work alongside Katy Knox, who is the president of our private bank. And the wealth management business includes our institutional and personal retirement business as well. So, you'll see those numbers incorporated in what we talk about.
Just in 10 minutes, I wanted to give a little overview of the business, talk about our strategy for growth and then, importantly, how we're trying to leverage the combined capabilities of Bank of America and Merrill Lynch to deliver the best in class wealth management experience for clients.
If we click to the first slide, it's truly an extraordinary franchise. I'm going to say more about it in a minute, but the scale of our business today is unmatched in the marketplace. We think, again, this combination of what Bank of America and Merrill Lynch brought to the table leaves us singularly positioned to serve the full range of our clients' needs.
The business is delivering strong returns, as you'll see in a moment. Importantly, the growth that we're delivering is organically derived and organically driven. That is a critical factor.
And then, finally, we're going to talk a lot about technology and the technology spending that's enabled by the fact that our company, overall, is spending $3 billion on new technology development annually, but at its core this remains a people business. And we're investing just as heavily around people and the capabilities of our people.
You see on slide three, this is the full continuum of our wealth management offerings. And we've put on the screen everything we do for clients ranging from our Merrill Edge business through the Merrill Lynch Wealth Management business, our private wealth offering within Merrill and the Private Bank. Collectively, this is now over $3 trillion of client assets. We're positioned to meet the full continuum of client needs.
On the left of the slide, this Edge business offers leading self-direct capabilities, digital advice capabilities. And the center of the slide is really the thundering herd, as Betsy talked about, the core of our wealth management business, very tenured advisors in all key markets in the US, the experience and the depth of capability here is very remarkable. In fact, Merrill Lynch today employs more certified financial planners than anyone in the marketplace. I'm sure we're going to talk at some point about Reg BI. And it's that kind of talent and training gives us a lot of confidence about the world we're moving into, of higher standards of care.
And on the right slide, the combined high net worth capabilities of the private wealth business in Merrill and the Private Bank, formerly US Trust business, is very unique.
Interestingly, if you think about our ultrahigh net worth business, today, the assets of our clients with more than $10 million on us represent 47% of our total client balances. IXI tells us that the combined market share of these businesses puts us at a 19.8% market share in the ultrahigh net worth market. That is the leading position among ultrahigh net worth players.
From a financial perspective, the progress in the business has been very steady and we feel we're in a strong position today. You see the net income progress in the upper left. importantly, we're operating at a very strong level of profitability, 28% pretax margins last year.
Last year, the business delivered $19.5 billion of revenue. And, importantly, when you think about how durable this franchise is, 84% of those revenues were a combination of our asset under management fees and our net interest margin.
The balances in the business have been growing at a cumulative average growth rate of 5%, really powered by the growth in AUM fees, which have been growing at nearly twice that rate, 9% on the slide.
The banking footprint of our wealth management business is again a very unique aspect of our franchise. We had $167 billion in loans outstanding when we ended 2018 and $261 billion of deposits.
If you just look at the deposits in our wealth management business, that – on a standalone basis – would be the eighth largest bank for deposits in the US.
The Merrill Lynch business is about 82% of the revenue in wealth management; private bank, 18%. However, I do want to call out, the private bank had a very strong year in 2018. They delivered a record net income and record margins. And so, Katy and the team have some real momentum in that part of our franchise.
Now, the core of this organic growth strategy has really been to try to get the Merrill thundering herd on the move again in terms of driving client acquisition. And we've had some remarkable success from that perspective.
As you see in the upper left, the organic growth engine is humming for us. On a net basis, our net new households in 2019 are annualizing at 47,000 net new households. That's up 6.5 times from the run rate of two years ago. It's up more like 10 times from historic levels for this business.
And, importantly, we've been able to see this increase in organic household acquisition happen with no decline in terms of the average size of a new household we're bringing in. The average new Merrill Lynch household is about $1.4 million. So, obviously, that ramp-up is powering flows which is helping drive the numbers you saw on the prior page around revenue.
This uptick in client development and client acquisition is also more than just a part of the financial formula for the business. This is culturally reenergizing this business because we have the thundering herd on its front foot out in the marketplace winning new business.
Interestingly, in 2018, the biggest increases we saw in terms of new client acquisition were financial advisors who have been with Merrill 30 years or more. They are now acquiring clients at the same pace as financial advisors who have been with us 5 years or 10 years in the business.
On the lower right, we continue to receive all sorts of accolades for the business, not just for the traditional position of our financial advisors on lists like Barron's, but in areas like Millennial Advisers that really kind of signal where the industry is going in the future. We're dominating the ranks of Barron's and Forbes and other lists who look at talent.
And then, finally, when we talk about the organic growth in the core of the franchise, we can't forget the fact that there are many areas of the marketplace where we have unique and powerful growth opportunities.
Just this slide in the upper right calls out the fact that, if we just focus on the mass affluent market, households, $250,000 to $1 million in client assets, we have 6.6 million of those households who do business with Bank of America today, but are not investing with our Merrill franchise. So, that is an ideal target for us in terms of driving next legs of growth for the business.
And then, finally, let me just wrap up with a couple of words about investments in the business. And I alluded earlier to the $3 billion of technology spend that happens across Bank of America. We are a major beneficiary of that spend. We're leveraging that spend. We're riding along on rails that are being laid by the consumer bank increasingly. It's putting our financial advisors in a unique position because they can see their clients' entire financial life in a way that most of our competitors cannot.
From the standpoint of developing offerings, the fact that we have this hybrid digital and human advisor set of capabilities gives us a lot of flexibility in terms of how we innovate and how we deliver to new segments.
So, you think about our Merrill guided investing offering, the robo advisor that we've had out for a few years, just recently we've added an advisor component to that offering. Today, that's a core part of how we're trying to attack that mass affluent growth opportunity.
And then, finally, these technology investments are also – they are essential in terms of delivering the growth that our advisors at Merrill Lynch need to deliver. When you think about that ramp up we showed earlier, that 10 times increase in terms of new client acquisition, we will not be able to continue that pace or accelerate from here if we don't have much more scalability in our franchise.
So, in ways big and small, we're using technology to make the day of our financial advisor and our CA more efficient. It used to take us, for example, 40 minutes on average for a financial advisor or their client associate to put together a review on the quarter for a high net worth client.
We now have client review tools, very simple types of process automation, that allows us to assemble and put together that kind of review in 10 minutes or less. And so, saving 30 minutes a day on every client review you do quarterly, that makes a big deal in our business. And there's very similar investments that are paying dividends on whether replacing fax documents with document scanning or delivering verbal recording rather than have clients have to share documents with us.
We're focused on bringing operating excellence to this business in a way, again, that lets us continue to drive the growth story that you saw earlier.
So, I think, Betsy, with that, we've tried to hopefully lay a number of themes out there that will be part of our discussion.
Q - Betsy Graseck
Super. Thank you, Andy. So, why don't we kickoff with a question about the overall wealth spectrum that you discussed? You highlighted from Merrill Edge, Wealth, to the Private Bank, can you give us a sense as to how much integration between those different organizations there is? Just kind of touching on the overall wealth strategy.
Sure. It's a great question. There's really integration on at least two levels. When we think about our operating processes and operating platforms, this full spectrum of offerings really, it rests on a single operating platform, a single product set. We have a single chief investment office with product groups that support that investment office. And then, we customize, of course, the delivery of capabilities from planning capabilities to the actual product set by channel. And so, having that centralized development of product capabilities, it's a very powerful driver of efficiency in the business.
The other area of integration, when you ask the question is really increasingly seeing how the continuum puts us in position to win and serve clients in ways that many of our competitors cannot. For example, when we're serving a company and we're in the workplace, having this full spectrum of offerings allows us to ensure that we can meet the wealth management needs of the employees of the company from the C suite to the shop floor, so to speak. We see many traditional Merrill clients who have the next generation of their family beginning their relationship with us on the Edge platform. And again, we can also grow with clients as they move from a young family starting out to some of the more sophisticated clients that we can serve. So, the business is very integrated in terms of how we go to market and it's integrated operationally.
At what point do you say to that Merrill Edge client, we have an advisor for you?
What we're very attuned to is, while we think about these offerings in terms of the complexity and in many cases the asset levels of clients, there is no hard lines that are drawn. So, we have many clients with our financial advisors who have $250,000 to $500,000 in assets. We also have many clients in the Edge business who have well over $1 million. We're trying to be there for the needs that our clients want to have met with an offering that matches the sophistication that they need. So, we ensure that Edge clients know that we have advisors available if they see a twist or a turn in their financial life. But we're never pushing or force-migrating clients from channel to channel. We're letting them select from the full spectrum…
Makes sense. Can we dig into that net new household acquisition? You highlighted a chart on the upper left of one of those slides, about the strong momentum that you've been seeing there. What's the driver of that growth? And maybe, you can just give us a sense as to reasons for why it's been accelerating and how you expect that to…
Thank you for the questions. My favorite part of the story. So, thank you. This has really been, over the last two years, nothing short of a transformation in terms of the energy around growth in our business. We made some compensation changes I want to talk about in a minute. However, I do think it's a mistake to go solely to comp as the driver of change because really the strategy was to try to align everything we do in support of the strategy of responsible growth. And so, that began with much more clearly stating that this is a growth business and if we're going to serve our existing clients well and at the level of innovation that we need in the business we've got be focused on growth, we have to be focused on expansion in market share terms.
We quickly understood that there were a lot of barriers inside our own firm to growth. We had grown, bureaucratized in many ways. We had processes that weren't well put together. As I talked about earlier, there's many ways that technology can help give scale to financial advisors. We weren't investing behind those ideas at the level that we should.
We did a lot of work around freeing up capacity, so capacity could be placed against growth. We looked at the compensation and the way we were managing our field management ranks because we think about this as a single national franchise, but there's really 102 geographic markets around the country where we're competing. Each of those markets has a market executive. And over the years, the performance objectives for those market executives had grown a little unfocused and diffused. We got them much more aligned to growth, which incidentally helps us a lot with our financial advisors because financial advisors see that their manager has to get in the game in terms of delivering growth.
And then, finally, we did make a very visible change to our compensation program for financial advisors. The grid remains the core and will be the core of the way we compensate financial advisors, but we flexed the grid payout levels for advisors as much as 2% higher for financial advisors that were growing effectively and we had as much of a 2% reduction for financial advisors who were not meeting the pace of growth. This was controversial when introduced. However, today, it's something that I think our financial advisors and most in the marketplace who look at this kind of realized this provided kind of an impetus and a reason to focus on growth that had somewhat gone by the wayside for a period of time in our business.
It's not the right thing from a shareholder perspective for the overall franchise, but if you're an individual financial advisor and you're looking at your own practice in business, projecting it forward 5 or 10 years, there is steady pricing compression that's happening in the marketplace obviously. We were reminding financial advisors, if you're not setting out to double your asset base over a five or six or seven year period of time, you're not going to like what your business looks like personally in the medium and longer term.
And so, we used all of those tactics. Incidentally, we connected financial advisors to each other and created peer groups where they are continuing today to push each other with regard to growth. That's something that's kind of powered the cultural change that's happened here.
And again, three or four years ago, the average financial advisor on a gross basis was bringing in 2.5 or maybe a little less than 2.5 gross new clients a year and losing a little over 2, and so we were netting 0.3 or 0.4 net new households per financial advisor per year. We today are operating at a pace of about 6 gross new households per financial advisor. Our retention of clients and advisors remains strong. So, the net is now well over 4. As we go forward, we think there's room to run with this strategy as we build more scalability in platforms, as we try to ensure that advisors could shepherd and deploy their time effectively. We think we can move kind of well beyond 6 gross new households per financial visor on average.
And that plus 2%, minus 2% is around an expectation that is set by the 102 regional heads?
It's set on a national basis and it's driven by two factors. One factor is gross household acquisition, and so we have a – we set a national expectation that you would bring in six or more gross new households if you were going to qualify for one extra point on the grid. And then, we have a second point on the grid that you can win by the addition of net flows to the business. This is product agnostic, and so these flows could be brokerage flows, AUM flows, deposits or loans. But what we want to see is, of course, evidence that your business is growing. So, advisors who are both growing net flows and bringing in new households have this opportunity to be plus 2% on the grid.
And then, how does that interact with FA headcount growth expectations?
Yeah. No, it's a great question. We have maintained very clear expectations that the thundering herd will be growing. Our core advisor headcount has been growing at a pace of about 1% a year. We've had some increases and decreases in the size of our advisor training program. Our advisor training program right now is a little lighter in heads because we put new performance expectations in that program about a year ago, and so we're starting to see some fallout, but we continue to invest and we're maintaining an advisor training program which is about 3,500 advisors at Merrill Lynch that are in training. That's a substantial investment for us. And we're increasingly – because we're building these hybrid offerings between Merrill and Edge, increasingly, look at our overall advisor headcount more broadly to include our financial advisors that are in the Edge business as well as the advisors in the Merrill Lynch wealth management business. When we view headcount trends over the last several years on that basis, we've been growing at about 3% per annum and we like that growth rate.
You'll see us continue to innovate with ways to develop talent. We now have a single unified training program across all of our advisor groups. We think that's very powerful for us. It's enabling us to bring more efficiency to the way we train because, increasingly, we bring people out of school, and rather than put them directly into a role in the Merrill Lynch wealth management office, they may spend a few years in our Edge business, becoming licensed, learning more of the basics of the business and, from there, move into the core Merrill Lynch training program. We see early signs that's going to help our yield in this program a lot.
So, that's a lot about how you're organically increasing your FA headcount. Are you also doing any kind of byway business as well on FAs or have you stopped doing that?
Really 18 months ago, we stepped back from competitive recruiting in the marketplace. That remains our position and it will remain our position going forward. We think the economics of advisor recruiting are very challenging. We think the cultural impact of advisor recruiting can be negative. We see a lot of evidence that the movement of advisors on this basis at scale around the industry doesn't serve clients particularly well with regard to disruption. So, we are focused on driving organic growth in the business, investing organically in advisor development and then ensuring that we have the most positive growth oriented platform for advisors to work on, so that we continue to see strong retention rates in terms of the advisors we have.
Got it. Earlier this year, Bank of America extended the commission free trades to all preferred reward members. And I think that's, what, about 5 million preferred reward members, right? So, maybe you could give us a sense as to how that is impacting your business. Is that generating leads or are there any other synergies that…
That change in particular has had no impact on our business. This is really – the preferred rewards program is a very powerful part of our proposition for consumers across the consumer bank and wealth management. We want clients – when they think about working with us across their entire financial life, we want them to feel at least three things. We want them to feel the more of their financial life they have with us, the better advice they're going to receive from us, the more convenient their life is going to be and stronger their rewards will be because they'll see, by consolidating with us, this preferred rewards program will pay off for them in dollars and cents.
We've had a free trade offer in the marketplace for 10 years almost. This has been one driver of the growth of our Edge business. What you saw on the earlier slide is now $211 billion. It's a very fast-growing part of our business. This recent expansion has had no material impact.
We are working hard and we're seeing a lot of progress in terms of clients moving from the Edge business to financial advisors. And so, as Edge grows, it actually helps us in the Merrill Lynch business and even the Private Bank and private wealth offering because clients, in some cases, are incubating there and then moving to our other offerings.
And we think there's a lot more we can do, but it's already a development that has a lot of scale to it. In 2018, of the new households that we brought in at Merrill Lynch wealth management, over 6,000 were clients of our Edge business who essentially upsold, if you will, to a Merrill Lynch wealth management relationship, a one-on-one relationship with a financial advisor. That was about 12% of all the gross new households we opened last year. We think that's a great illustration of the synergy across the offerings. And we think it's a good start, but there's a lot more that we can do in terms of that type of cross-referral activity.
You've also got not only retail, obviously, at Bank of America, but also investment banking, commercial banking. Are there any ways that you want to highlight how those relationships or partnerships…?
When you think about Tom Montag's set of businesses, it ranges from the investment bank, the commercial bank and small business banking as well as the global markets business. We have synergy points with all of those offerings. If I think about what is most center of the plate and has the opportunity to deliver real scale benefits to the Merrill Lynch thundering herd, it would probably be the consumer – or the commercial bank is the best illustration of this. That franchise of Bank of America is extraordinary. Today, the global commercial bank at Bank of America banks one of three companies in the US with revenues $50 million to $1 billion. So, that reach in the marketplace is very broad and it's a direct overlap with the core client base of Merrill. So, increasingly, our team and Alastair Borthwick's team, who runs the commercial bank, we're together jointly covering clients. And again, that is a driver of new client acquisition for us.
What about expectation for new branches? Obviously, that's in the retail business, but there is a plan to open up 500 new branches. Some are already opened up and underway, and you've got entering into new markets. How does that impact your business?
We benefit from it. It's been very interesting. Now, with 10 years since Bank of America acquired Merrill Lynch – there were many predictions, of course, in 2009 that it would be culturally challenging to integrate these businesses. There was a lot of commentary about that in the years directly following the financial crisis.
The very interesting dynamic today, when I think about the number one area of concern or complaint that would come from a financial advisor to me about the consumer bank, the complaint is why isn't the consumer bank in my market where I'm operating because I don't have some of the same advantages that other financial advisors have who are within the bank footprint with regard to crossover clients, leads and referrals and the like.
And so, as the consumer bank expands into a market like Pittsburgh, for example, Merrill Lynch has been operating in Pittsburgh for 75-plus years. That is a very powerful new addition in terms of the capabilities we can deliver for clients. It's a branding opportunity for our company and for Merrill. And so, this expansion, while it's not – while we're not literally putting Merrill Lynch advisors in many cases into new markets because we're already nationally branched and nationally positioned, it does provide some rocket fuel in markets where we've been for a long time.
Okay. I'll just see if there's any questions from the group here. Sure, there's one right here in the middle.
Cam you talk about the shift from brokerage assets to advisory assets? How much more runway is left there? And then, second question, when you look at a typical advisory portfolio, what's the product fee? What are vehicles you're putting clients in? Kind of what's the trend in terms of the product composition of a typical advisory relationship?
Yeah. No, great question. I think that over – up until two years ago, probably the prior five years, we were seeing pretty extensive shifts from brokerage to investment advisory within the existing book of business. So, when you looked at our results, you were seeing strong growth in AUM balances, declines in brokerage balances and our total net flows were, which we don't disclose every quarter, but our total net flows were not as strong as we would like.
I think that rebalance from brokerage to investment advisory has largely happened. In particular, the DOL fiduciary debate, discussion, implementation and then policymakers stepping back from that program, that probably provided impetus to ensure that we now – every client understands our investment advisory offering, investment advisory platform and those who want to do business on a fee basis and work with us that way know that offering is in place.
So, I think the wholesale shift of assets from brokerage to investment advisory is – that's a pretty mature trend. So, the growth you can see going forward is going to be flows into our fee-based AUM programs that are just coming from the enhanced organic growth rate of the business overall. And that's what we've seen in the last couple of quarters. I expect that to continue.
Our investment advisory program overall is now north of $800 billion. We call this platform our Merrill Lynch One platform. The average pricing on the ML One – around Merrill Lynch One is 91 or 92 basis points. The internal product costs are – they are being aggressively managed down by financial advisors. There is far more utilization of ETFs and other low-cost products within the investment advisory program. Today, I think overall at our firm, there is approximately $250 billion of ETFs which are used as portfolio building blocks. That's up from a number like $50 billion five years ago.
And the nature of the activities that are happening within the investment advisory program are what you would expect. It provides kind of the core framework for – an end to end, goals-based wealth management dialogue with clients. It's the way in which we profile and kind of capture objectives. The framework of the ML One program enables us to manage portfolio risk in an ongoing way very actively and it also provides the structure for much more disciplined client reviews and the maintenance of client notes over time.
And all of what I just described were best practices of most of our financial advisors over the years, but the business has now shifted to a place where these are now essential components to a branded client experience that we're delivering for clients. And so, we feel like the quality of what we do for clients has been dialed up.
Implicit in your question, the overall cost to clients is coming down. And then, in line with responsible growth, we've got a much better framework to manage portfolio risk today than we have in the past.
Could we talk a little bit about pretax margin? So, pretax margin in the business, up nicely. I think it was like 27% in 2017. Now, up to 29% in 1Q 2019. Maybe give us a sense as to – if there's any room to run from here.
We tend to think that a 30% pretax margin is a healthy margin level for the business. Of course, the trends, everyone in the room knows well, in the marketplace can push that up or down a bit. We've got investments that we have been making and we think about making in the business, which can also affect the margin. But I would stay anchored to 30% pretax margins is a very healthy operating level for the business. And at that level, we feel good that this is an industry-leading franchise in terms of profitability from the shareholder perspective.
And you talked a little bit earlier about the technology. One of the questions we get is, hey, how has the e-broker competitor set been impacting you? Maybe you could give us a sense of that. And as it relates to how you're competing with them, via the technology…
I think that if you look back at the position that we were in 10-plus years ago when the Edge business didn't exist, that was a one-way trade out to e-brokers that was happening. The work that Dean Athanasia, Aron Levine and many others have done in building the capabilities at Edge, and it is increasingly a spectrum of capabilities from leading self-directed capabilities to digital advice to now hybrid digital human advice offerings, this has stemmed the flow out to e-brokers. It's put us again in position to ensure next-generation clients are investing with us, our core high net worth clients who have trading account that they maintain on the side that they can have those with us, like we compete for those assets very effectively. So, from our perspective, we're now in position with the with a spectrum of offerings that has really helped us kind of seal off some of the risk we have from e-brokers.
And then, thinking forward about the technology, maybe give some color on where the runway is to continue to enhance productivity and potentially clients reselection. I don't know if you're using Erica at all in your channel. You always ask me how I like Erica. So…
You'll be seeing Erica coming before long to the wealth management business. The client response in the consumer bank to Erica has been very powerful, particularly now as Erica is evolving to offer more guidance and insight to bank clients. It doesn't take a creative leap to see how that could apply to wealth management clients, so that is on our runway.
Erica also offers the opportunity to help us with regard to this capacity challenge I talked about earlier. Again, you think about the day of a client associate who's supporting an advisor team, there's a lot of tasks which are queued up when they come into the office in the morning. Many of those tasks are relatively repetitive and, therefore, are prime territory for the kind of automation that Erica can enable.
I wouldn't think about what technology is doing from a capacity standpoint in our business that it's going to be any one thing that is going to be transformative. It's going to be a lot of mid to small-sized projects which collectively are dramatically changing the day of a financial advisor. We thought we were very aggressive in 2018 in saying to our financial advisors, we think we can offer automation solutions that will give you one month's worth of time back in your practice and we more than delivered on that last year through things like the automation of client reviews that we talked about, incidentally, to the question about our investment advisory program. We have a lot of hours that financial advisors were putting into their own investment research and portfolio building, which has been today replaced in many cases by following our chief investment office strategies more closely and, therefore, bringing consistency and scalability to the core investment management activities.
So, all of these aspects, whether from an investment managers perspective or an operational perspective, they're giving time back to advisors and advisors are using that time to broaden the range of activities that they're pursuing with clients and drive business development.
Anything in the market environment? It's been pretty volatile over the last couple of quarters. Maybe give us a sense as to how your clients are reacting. And with rates where they are right now today, being flattish the past couple of – deposit betas, just give us a sense of what's going on there.
Yeah, sure. I think in terms of sentiment, there hasn't been a lot of change. I think when we talk to – well, when we talk today to clients about, first of all, the real economy, what's happening in their businesses, what they're seeing as executives at companies, that continues to be a pretty bullish conversation. People feel activity levels are high. We're all seeing and watching the changing environment and the way that bond markets are – what the bond markets are telling us about the future. We're not hearing that from clients in terms of the way they're experiencing activity levels in their own businesses.
We do continue, from a sentiment perspective, to – we hear a lot of caution from clients. The conversation with a client around deploying more funds into the equity market, that is a very challenging conversation today. As a contrarian, that makes me quite bullish right now. That has not changed a lot in the last six months. We did not, before last year's downturn, we didn't see a lot of – or hear a lot of exuberance. We didn't hear exuberance coming back as markets rebounded this year. And so, I think there's a good amount of caution among our client base. And again, I think it's going to be fuel for a more sustained rally frankly.
Okay, great. Well, thank you very much, Andy. Appreciate your time this morning.