From the December 2009 issue of Investment Advisor • Subscribe!

Retirement Planning: Income Plans, Merrill Style

Service links BofA deposit accounts with Merrill Lynch cash management accounts

Merrill Lynch Global Wealth Management announced October 26 a new retirement income program, available to its 15,000 brokers, one of whose components--My Retirement Income--allows clients nearing or in retirement to transfer funds from a consolidated Merrill Lynch cash management account into a Bank of America (BofA) deposit account on a periodic basis for simplified retirement income distribution and management. Funds transferred into a Bank of America deposit account can be easily accessed via more than 6,000 retail BofA banking offices and more than 18,000 ATMs. My Retirement Income allows for "the transfer of [wealth management clients'] funds from their investment account into their Bank of America checking account for spend down," says Aimee DeCamillo, head of personal retirement solutions for Merrill Lynch Global Wealth Management.

My Retirement Income is available within the Merrill Lynch Retirement Income Service, which also enables Merrill advisors to help clients track their spending behaviors in retirement and to provide more holistic advice on managing cash flow and adjusting retirement investment strategies to better enable Merrill clients to have their savings last throughout their lifetime. Merrill's retirement income service is "a proprietary planning tool that creates a dynamic customized income plan for the client that allows them to clearly see what their sources of income are and how that compares to their target spending," DeCamillo says. "When there is a gap [in income], the advisor can work with the client from a portfolio construction perspective to fill that gap." That's where the other new Merrill service, called Merrill Lynch Retirement Income Framework, comes into play "with regard to how that investment strategy is developed," DeCamillo adds.

DeCamillo says the Merrill Lynch Retirement Income Framework is the first program that Merrill has created "as it relates to investment strategies for retirement income." She says that the Framework was created by taking best practices from top Merrill advisors "to create an approach that can be leveraged across the institution," she says. She says the Merrill Lynch Retirement Income Framework approaches retirement income planning holistically, enabling Merrill advisors to advise clients on retirement income strategies by taking into account a client's individual risk tolerance, retirement consumption needs, and appropriate asset allocation.

Heather Evans, a senior Merrill Lynch Wealth Management advisor, says the Framework replaces the systematic withdrawal method for retirement income. "The common practice prior to the Framework is that we would invest and just pull money out each month or each year--systematic withdrawal," Evans says. "The problem with that is you might be pulling money out when the market is down significantly and that can hurt you in the long term." With the Framework, the advisor looks at the amount of money a client will need to year-to-year. "It might be you're looking at the next two, five, or seven years. Much will depend on [the client's] personal psychology and their net worth. The higher their net worth and lower the outstanding expenses, the more comfortable they are with a fewer years set aside." The Framework also allows advisors to factor in "lump-sum expenses that you didn't take into consideration with the systematic withdrawals," Evan says, like a trip around the world, college education, or a family ski trip.


Washington Bureau Chief Melanie Waddell can be reached at mwaddell@investmentadvisor.com.
Reprints Discuss this story
This is where the comments go.