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Should Advisors Fear BofA’s New Digital Planning Tool?

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Bank of America’s Merrill Lynch, Merrill Edge and Private Bank advisors likely don’t have to worry too much about losing any of their clients as a result of the Life Plan digital planning tool the firm announced early this week, industry experts told ThinkAdvisor.

“Banks with millions of customers need to leverage technology to be able to engage, so this is yet another financial planning calculator-goal tracker that is much, much better than what they had,” according to Tim Welsh, head of the consultancy Nexus Strategy and a former Schwab executive.

“For the mass affluent, it can work and no Merrill advisor can touch anyone under $1 million, so [it poses] no threat at all” to advisors, Welsh said, adding: “If anything, this will be a lead generation tool for Merrill Edge” advisors, but not typical Merrill Lynch advisors.

Similarly, Danny Sarch, president of Leitner Sarch Consultants, told ThinkAdvisor: “I don’t think any new, single online tool is a threat to the relationships that Merrill advisors have with their clients,” especially those with at least $500,000 in assets.

“The idea that this will somehow poach clients from Merrill Lynch who see it as competitive is, I think, way overstating it,” he said, adding: “There are nuances and ups and downs, and you need to realize when you reach a certain level of sophistication you need to talk to a professional,” he said, adding: “I don’t see that changing, regardless of the financial tool.”

One Downside

However, calling Life Plan a “mixed blessing for Merrill Lynch advisors,” Mark Elzweig, president of Mark Elzweig Company, told ThinkAdvisor: “On the one hand, the bank could refer clients to them who need more customized advice. On the other hand, advisors have less control over the relationship.”

Still, “digital tools have broad appeal these days,” Elzweig said. “While younger investors are more likely to be do-it-yourselfers, many other investors will feel reassured using these tools in conjunction with an experienced financial advisor. I don’t think that they’ll replace advisors.”

The digital experience could also prove to be “the focal point of a collaborative experience between the client and the advisor” that leads to a better client-advisor experience and relationship, he added.

The Mobile Advantage

One of the big positives about Life Plan is that mobile technology “reaches the large proportion of younger” people under 30 who “abhor face to face meetings,” and it also “saves travel time, and can be done off hours anywhere anytime,” according to Andy Tasnady, managing partner of Tasnady Associates.

While he said there are no negatives from a consumer point of view, however, he did predict Life Plan could, “in the long run,” pose a threat to Merrill advisors “in terms of providing alternative channels to future HNW investors.”

But he was quick to add: “It’s really just increasing the market. It’s not like some people are going to run away from their existing financial advisor” if they have $1 million or more in assets. “There will always be a role for  personal advisors,” he predicted.

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