From the February 2012 issue of Research Magazine • Subscribe!

Merrill Lynch Boosts Asset Minimum

Merrill Lynch is raising its minimum asset level for client households to $250,000 from $100,000 this year, the Bank of America unit said in early January. The move, experts suggest, appears to be one more way for the unit to boost results of its high-end wealth-management business while carving out an expanding market for its mass-affluent Merrill Edge operations.

Merrill Lynch will not change payouts tied to existing household relationships of under $250,000 but will now pay out 20 percent on new accounts in this category. Plus, if an advisor has more than 20 percent of his or her book tied to relationships in which the household has assets of under $250,000, there will be no payouts for new household clients with asset levels of this size.

“Moving said minimum from $100,000 to $250,000 sends a loud message of what the firm values,” said Chip Roame, head of Tiburon Strategic Advisors, in an interview. “And it makes being an FA more challenging.”

On the one hand, “Merrill Lynch is back-filling service for these smaller accounts with Merrill Edge, so the firm will be able to capture all types of clients,” explained the Northern California-based consultant. And on the other, “The firm will allow its FAs to still take on and service these smaller accounts to a limited degree when the FAs see the upside.”

“A lower payout on smaller accounts is a well-founded business strategy,” stressed Roame. “Similarly, a policy that no payment will be earned after a book is comprised of more than 20 percent of these small accounts is another solid business strategy; I like it, too.”

In 2011, BofA said it was on track to nearly double thenumber of Merrill Edge advisors serving mass-affluentclients in branches and call centers to more than 1,000 by year-end. •

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