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How Merrill Clear Was Born From Surprise Boomer Discovery

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When clients talk, Merrill Lynch listens.

This variation on an ex-rival’s ad theme came into play fortissimo while Bank of America Merril Lynch was fixed on creating a new retirement-income product. But six months of baby boomer focus groups unearthed that retirement income isn’t folks’ top concern it’s retirement outcome they most want help with.

So the wirehouse scrapped the new-product idea and got cracking on something altogether different: a way for advisors to engage clients and prospects in an in-depth conversation leading to better outcomes plus a preview peek at them.

Merrill Lynch Clear, launched last May, is a framework that helps FAs explore seven client life priorities: family, home, finances, work, health, leisure and giving. Clearing a path to financial-goals analysis and therefore more financial planning, Clear segues right into Merrill’s Goals-Based Wealth Management approach.

Thus far, of the firm’s 13,700 FAs, 8,600 are using some aspect of the Clear process, which includes videos, white papers and seminars. About 4,500 advisors are employing Clear’s crown jewel-tool: a series of iPad “Discovery Apps” with colorful infographics that focus on each of the seven priorities, plus retirement-specific components such as Social Security.

Hunkering down with FAs’ iPads, advisors and clients or prospects can check out customized what-if retirement scenarios. For instance, with the Health App, it’s possible to forecast out-of-pocket costs based on clients’ specific medical conditions as they age.

ThinkAdvisor recently interviewed David Tyrie, the man whose call it was to scrap the new retirement income product idea and focus instead on his brainchild: a way to help plan for satisfying retirement outcomes.

From his Boston office, Tyrie, managing director and head of retirement and personal wealth solutions, and institutional retirement solutions, answered the who, what, when, where and why of Merrill Lynch Clear. Here are highlights:

Think AdvisorBefore Clear, was something lacking in the way Merrill advisors were engaging clients and prospects about retirement?

David Tyrie: To be blunt, the topic of retirement is a really hard one, and we learned from our focus groups that it’s really confusing because there are too many moving parts. We’re dealing with the boomer masses, who are very different from any other generation. Previous generations had defined benefit plan paychecks in retirement. Today we’re dealing with the first group who has [retirement funding] on their shoulders.

What’s the firm’s goal with ML Clear?

Better conversations with existing customers and longer relationships.

Does the client or prospect need to have a minimum asset level for the FA to use Clear?

No threshold is mandated by any stretch of the imagination. But our client base usually starts at $250,000. We’re typically dealing with boomers. We’ve found that the most successful conversations are with people 50 years old and above because they’re thinking about retirement or are already retired. What makes them a particularly good opportunity for using ML Clear?

In many cases, they have assets in other places. What they want to know is how to simplify that and bring everything together. ML Clear does it. We’re essentially adopting a new way of doing client management.

To what extent is the Clear framework helping advisors versus helping their clients?

It gives clarity to both. It enables a whole new level of profiling clients and understanding their needs. The better you know your client, the better the solution set and that goes well beyond traditional things like suitability. For the clients, it’s enabled us to educate them and find out what trade-offs are necessary.

How much more financial planning are FAS doing because they’re using Clear?

I don’t call it financial planning. I call it the financial strategy. Every single client that engages with ML Clear is engaging in a very deep conversation about their financial strategy.

There are 4,500 specially trained FAs using the Discovery App. How does that stack up with the number you projected?

We’ve exceeded our goal. We thought we’d have on the order of 2,000.

How much FA resistance has there been to adopt the process?

We’ve met with no resistance whatsoever with advisors saying they don’t want to use the iPad. In many cases, our longest tenured advisors are loving the adoption of the iPad because it’s very simple and intuitive. It’s not linear they can go anywhere clients want to go.

Apart from using iPads, how else can FAs engage folks with Clear?

There’s a paper-based version, and Clear can be done in seminar format with large groups.

 How would you assess Clear’s success now that it’s been in use about a year?

 Client satisfaction is off the charts. We’re giving clients enough confidence to start consolidating additional assets and capabilities with us. By that reaction, it’s proven to be an outstanding decision. This is something you have to measure by “Are clients satisfied, and do you keep those clients for a long time?”

What about results from the client’s point of view?

The most important one is the peace of mind that people walk away with. But we’re struggling with how to measure that.

Please talk about the genesis of Clear.

We stumbled upon what became ML Clear after years of research.  We originally thought we were going to create a new product for retirement income. But then, in six months of focus groups in 2013, baby boomers told us, “No, no. It’s not about retirement income. It’s about ‘How am going to be living my life?’” We found that they weren’t looking for a product; so we did a complete 180-degeee turn. But why isn’t retirement income the issue for them?

For the last 20 years, Boomers have been in an accumulation mode. By at age 65, it’s not about accumulating the money. It’s about “How am I going to maintain, and what is the outcome of my life going to look like?”

Was there anything in particular that helped convince you to go in this other direction?

One man in a focus group, about 64 or 65 and very successful in his career, said: “A rocket is on track to hit the moon only 3% of the time because there are too many variables and unknowns and that’s why we have mission control. I don’t want to be put in a rocket [when I retire]. I want a relationship that will provide me with mission control.” So we went in thinking we were going to build a rocket; and we came out saying, “It’s not the rocket they want it’s the constant course correction.”

It was you, personally, who made the decision not to develop the income product but to create what became Merrill Lynch Clear?

Right. We would develop mission control. This would not be a silver-bullet solution, but we’d be there for clients as part of their decision-making. A breakthrough for us was [realizing] that life priorities you have now will be very different from priorities 10 years from now. That’s where mission control comes in. We have to look at retirement in a much more holistic manner because life will change, and trade-offs will be a regular thing.

How did you come up with the specific seven life priorities: family, home, finances, work, health, leisure and giving?

By literally rewinding the focus-group tapes to find out what was important to people and what they wanted to talk about. It always came back to those seven things.

So you created Merrill Lynch Clear based on that concept?

Yes, and on prioritizing the relevant priorities. For instance, if we find that health is very important to you, we’re going to help find an outcome that gives priority to health matters.

In the focus groups, did clients bring up the subject of product?

No not about beta or alpha. That’s not the way clients talk that’s the way the industry talks.

I was wondering if they said, “I don’t want a broker who’s going to say, ‘I’ve got something great for you to buy!’”

Oh, yes, they did. You’re exactly right. They used words like, “Don’t tell me you have a crystal ball!”

At what point in the Clear process do FAs start recommending product?

The first step is understanding the client’s life, and the seven life priorities help in that dialogue. After we collect their profile and [determine] their investment personality, we sit down to map out goals. And what about product?

We figure out how to articulate the wealth allocation; then we finally get into portfolio construction. The beauty is that we don’t create any of our own proprietary products. So we don’t care what the products are as long as they’re most appropriate for your life priorities and goals.

Do all three steps occur in one meeting?

If it’s with an existing client, yes. If it’s a brand-new client, usually it happens over multiple sessions.

How about Merrill Edge clients? They may not have as much as $250,000 to invest, but they need lots of help with retirement planning. Do they get ML Clear?

No, but here you’re dealing with a very different client base like, do-it-yourselfers who don’t want to be talking to an advisor. Merrill Edge has all sorts of resources, such as calculators, to help with their retirement. However, we’re starting to incorporate a lot of the content-only part of Clear into dialogues with people who walk into the branches to help them understand their needs.

 Is there an additional client charge for Clear?


What about increased cost on the part of Merrill Lynch?

Yes. We’re constantly reinventing the resources we’re giving advisors for client discussions. In our first year, we invested heavily in this strategy. We said, “It’s worth the bet to have a new type of resource to enable a client and advisor to hold a conversation around life priorities that they’ve never had before.” We think we’ve already seen the payoff.

How much did you heavily invest?

We don’t give away those numbers. But one part of it was in expertise, both in-house and partnering outside with people like Ken Dychtwald [CEO-president] of Age Wave. The expertise was both in creating the system and in financial [matters], as well as expertise in life priorities most relevant to the boomer generation. We partnered with BlackRock, for example, to give us content on how to have a conversation around Social Security. And we’ve invested in technology and education, especially advisor education.

Is there an entity in the firm dedicated solely to Clear?

We have the Merrill Lynch Clear Department with 15 people. There are product managers in each of the life priorities: a Family lead product manager, and managers for Home, Work, Finance, Health, Leisure and Giving. And we have a person focused on making sure that all the resources are aggregated and relevant.

There’s a gamification aspect to the Clear process. Explain where that shows up.

In understanding your life using the Discovery Apps, because that’s where you try to open up an honest dialogue and help figure out what’s most important and less important. For instance, advisors use interactive cards indicating the client’s hopes and concerns related to the specific priorities.

Can the infographics and numbers the FA plugs in transfer to computers or iPads for client study at home?

We have some leave-behind material. But later this year we’ll have a version of Clear that clients can access themselves.

You have a B.S. degree in psychology. Has that been useful with respect to ML Clear?

Here’s where psychology comes into play: There has to be a better way of having a dialogue with the client to help them understand their life. We think we have it.

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