BofA Makes Retirement Services Push for Merrill

Programs focus on institutional clients, small-business customers

Bank of America (BAC) is rolling out a defined-contribution consulting service for institutions at Merrill Lynch and a 401(k) service for small businesses at Merrill Edge.

“We are leveraging our investment management education and guidance group to be a screener for advisors to utilize, which is a significant advantage for our financial advisors,” said Kevin Crain (left), head of Institutional Retirement & Benefit Services for Bank of America-Merrill Lynch, in an interview with AdvisorOne. “They can tailor these services for individual-plan sponsors.”

Some rivals have an individual RIA or advisor put such solutions together, whereas Merrill FAs can “leverage the largest investment management guidance capacity available,” Crain said. “This should be exciting to plan sponsors as they look at this service.”

The DC services, announced Friday, will be introduced during the rest of 2012 and in 2013 to institutional clients with $25 million or more in assets. The DC services could be offered to plans that currently hold about $1.2 trillion of assets nationwide, according to BofA-Merrill, which officially relaunched its institutional retirement service offerings last fall.

About 250 Merrill Lynch advisors now hold specialized defined contribution or global institutional consulting designations. Next month, these advisors could pursue training in order to sell these new DC consulting services.

“We think that 30 to 50 will come out initially for this further accreditation, and that number should grow to close to 100 advisors or so a year from now,” Crain said. Though this work isn’t meant for hundreds of Merrill’s thundering herd—which now numbers about 17,000—it could generate some recruiting interest, he says.

Merrill Edge, 401(k)s

On Tuesday, BofA said it introduced Merrill Edge Small Business 401(k) services for clients with plans that include $250,000 or less in total assets.

“We know how important small businesses are to our nation’s economy and how dedicated their owners are to their employees,” said Robb Hilson, Bank of America Small Business executive, in a press release. “Offering a simplified 401(k) plan, designed to address the needs of small-business owners and their employees, is yet another way we are showing our commitment to supporting small businesses.”

According to the U.S. Government Accountability Office, 14% of small-business employers offer a retirement plan to their employees.

“In a recent Bank of America-Merrill Lynch Workplace Benefits Report, more than half of small business owners cited retirement benefits as one of the top tools for retaining employees and attracting new talent,” said Rich Linton, head of Business Retirement Solutions for Bank of America Merrill Lynch, in a statement. “The generally lower costs than many traditional plans and accessibility of this solution enable business owners to provide employees with an important, tax-advantaged retirement savings tool, while also receiving potential tax benefits for their business.”

The Merrill Edge Small Business 401(k) is self-serviced and managed completely online. It includes a streamlined investment menu selected by Morningstar Associates, who assumes investment fiduciary responsibility and simplifies the fund selection process for clients, while helping take the guesswork out of fund selection for employees, according to BofA.

Also, these 401(k) plans offer tools such as a Savings Incentive Match Plan for Employees (SIMPLE) and Simplified Employee Pension (SEP) plans.

BofA currently has more than 1,200 financial solutions advisors (FSAs) serving mass-affluent clients; about 500 are based in branches and the remaining 700 in Merrill's three advisory centers. It also employs about 700 small-business bankers serving clients in bank branches and plans to have 1,000 in place by mid-2012.

Merrill FSAs focus on investors with between $50,000 and $250,000 in investable assets, which BofA sees as an important market segment and growth opportunity.

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