Wealth Management at Merrill Lynch – A Subsidiary of Bank of America Corporation
Merrill Lynch Wealth Management, a subsidiary of Bank of America Corporation, offers comprehensive investment and wealth management services.
Amidst the financial turmoil of 2008, Bank of America Corp. made a strategic move to acquire Merrill Lynch and its extensive network of over 16,000 financial advisors, resulting in the establishment of the largest brokerage business in the nation at that time.
However, the roots of both entities stretch back much further. Bank of America boasts a history spanning over 240 years, while the Merrill brokerage shop first opened its doors on Wall Street in 1914.
Today, Merrill Lynch Wealth Management’s investment advisory business operates under formal regulatory oversight, registered as Merrill Lynch, Pierce, Fenner and Smith Incorporated, as well as Managed Account Advisors, LLC.
Notably, the former holds a broker-dealer license. With a workforce exceeding 36,000 employees, including over 27,000 dedicated to investment advisory functions, the firm stands as a cornerstone in the financial industry.
Unveiling Merrill Lynch’s Financial Legacy: A Transformation Over Time
Formerly a cornerstone of Wall Street‘s investment landscape, Merrill Lynch & Co. underwent a significant transformation post-acquisition by Bank of America (BAC) in 2009.
Now known simply as “Merrill,” it operates as a pivotal wealth management division within Bank of America.
Established by Charles E. Merrill in 1914, Merrill Lynch & Co. has held a prominent position as an iconic institution in the American financial sector.
Exploring Merrill Lynch & Co. Today
Headquartered at 250 Vesey Street in Manhattan, New York, Merrill Lynch & Co., now “Merrill,” is a vital part of Bank of America’s structure.
Managing assets surpassing $2.75 trillion, the firm boasts a workforce of over 19,000 financial advisors.
While its current focus is on wealth management, Merrill Lynch & Co. continues to be renowned for its investment banking endeavors.
Notably, in June 1971, Merrill Lynch & Co. initiated its public offering, marking its debut on the New York Stock Exchange (NYSE).
During the early 2000s, Merrill Lynch & Co. cemented its position as a leader in the market for mortgage-backed collateralized debt obligations (CDOs), catalyzed by its strategic acquisition of the subprime lending firm First Franklin Financial in 2006.
Bank of America and Merrill Lynch: Weathering the Financial Storm
During the tumultuous period of the 2007-2008 financial crisis, Merrill Lynch & Co. found itself at the center of widespread concern.
In November 2007, the company disclosed staggering losses amounting to billions of dollars attributed to its portfolio of subprime mortgages and associated derivative products.
Following the departure of its chief executive officer (CEO), Merrill Lynch & Co. embarked on a journey of asset divestment, striving to bolster its financial stability amidst mounting speculation of imminent collapse.
In a pivotal move in September 2008, Bank of America proposed a takeover of Merrill Lynch & Co. with an offer exceeding $40 billion.
This acquisition bid, representing a premium of over 70% relative to the company’s then-depressed market value, was swiftly accepted. Subsequently, Bank of America concluded the acquisition, finalizing the deal through a $50 billion all-stock transaction.
Merrill Lynch Embraces Digital Transformation
In response to the evolving landscape shaped by digitalization, Merrill Lynch has announced strategic adjustments.
According to Financial Planning, the company intends to revise payouts for advisors managing small account holders in 2021, aiming to reinforce stability.
Under the new structure, advisors will not receive payouts for production credits generated in households with assets totaling less than $250,000.
This strategic shift mirrors a broader trend observed across major brokerage firms, which are increasingly encouraging advisors to focus on larger clients while transitioning smaller accounts to robo-advisors or self-directed platforms.
The decision underscores the profound impact of digital transformation within the fintech sector.
A senior Merrill executive emphasized, “That [shift] really reflects where our business is today and where it is going,” highlighting the company’s forward-looking approach amidst the rapidly evolving financial landscape.
Pros and Cons of Merrill Lynch Wealth Management
Pros:
Diverse Range of Programs:
Merrill Lynch Wealth Management offers a comprehensive selection of programs catering to varying client needs.
Clients have the flexibility to choose between discretionary or non-discretionary accounts, with options ranging from limited investment choices to a diverse mix of individual securities and alternative investments.
Additionally, clients can opt for accounts managed by third-party managers or Merrill managers, ensuring a tailored approach to investment management.
National Accessibility:
With nearly 3,000 offices nationwide, Merrill Lynch Wealth Management boasts a widespread presence, facilitating easy access to financial advisory and broker-dealer services.
This extensive network ensures clients can conveniently meet with their advisors in-person, irrespective of their location within the country.
Access to Cutting-Edge Research:
Merrill Lynch Wealth Management provides its financial advisors with access to a wealth of internal research and industry insights published by analysts, economists, and researchers within the broader Bank of America Merrill Lynch network.
Recognized as a top global research firm by Institutional Investor from 2011 through 2020, BofA Merrill Lynch Global Research offers invaluable guidance to inform investment decisions.
Digital Advisory Programs:
Clients seeking a tech-savvy and cost-effective approach to investment management can explore Merrill Lynch’s digital advisory programs.
The Merrill Guided programs offer a robo-advisory tool that charges competitive fees of 0.45% of assets under management.
For those desiring personalized guidance, a financial advisor can assist in identifying goals and suitable investment options for a fee of 0.85%.
National Recognition:
Merrill Lynch Wealth Management advisors consistently feature on prestigious industry lists, including Barron’s Top 1,200 Financial Advisors and the Forbes Top Women Wealth Advisors list.
This recognition underscores the caliber and expertise of Merrill Lynch advisors.
Cons:
Fee Transparency Challenges:
Determining fees in advance can be challenging for clients, as fee schedules vary across different programs.
This lack of standardized fee structures necessitates thorough comparison-shopping among financial advisors to ascertain the total cost.
Limited Service Offerings:
Not all advisors at Merrill Lynch Wealth Management offer every program or service available, leading to potential discrepancies in service availability.
Clients are advised to discuss with individual advisors to understand the range of services offered.
Potential Conflicts of Interest:
Merrill Lynch Wealth Management faces potential conflicts of interest, as the firm may have financial incentives to recommend its own products or funds with higher fees.
Moreover, advisors may earn compensation from selling specific securities and insurance products, potentially influencing their recommendations.
Referral Compensation:
The firm compensates third-party entities for client referrals, with the compensation deducted from the advisory fee paid by clients.
This arrangement may raise concerns regarding the objectivity of referrals and potential impacts on client-advisor relationships.
Disciplinary Disclosures:
Merrill Lynch Wealth Management discloses a significant number of disciplinary items, reflecting the complexities associated with its large-scale operations.
While not uncommon for a firm of its size, the extensive list of disciplinary disclosures merits consideration by prospective clients.
Whom Does Merrill Lynch Wealth Management Serve?
Merrill Lynch Wealth Management primarily caters to individuals who do not possess a high net worth.
According to the Securities and Exchange Commission (SEC), high net worth individuals are defined as those with at least $750,000 under an advisor’s management or a net worth believed to be at least $1.5 million.
The firm does not impose a universal minimum investment requirement to open an account; however, certain programs or investment strategies may necessitate a minimum threshold.
For instance, the Merrill Guided Investing account, a robo-advisory option, mandates a minimum investment of $1,000 for participation.
Conversely, the Managed Account Service, which empowers clients to select their preferred managers not offered elsewhere through Merrill’s advisory program, mandates a minimum investment of $100,000.
As for the Strategic Portfolio Advisor account, the minimum requirement is set at $2 million, although this threshold is subject to negotiation, as outlined in the firm’s brochure.
Merrill Lynch Wealth Management Services Overview
Merrill Lynch Wealth Management offers a comprehensive suite of investment management and wealth management services tailored to meet diverse client needs. Here’s an overview of the services provided:
- Merrill Guided Investing: This robo-advisor program offers virtual assistance to clients in setting financial goals and managing their investment portfolios through an automated platform.
- Investment Advisory Program: Clients seeking personalized guidance can opt for this traditional program, where dedicated financial advisors assist in defining goals and manage investment portfolios using a wide array of potential investments.
- Third-Party Investment Managers: Merrill Lynch facilitates access to third-party investment managers, either recommended by financial advisors or independently selected by clients, providing additional investment options.
- Brokerage Services: As registered broker-dealers, Merrill Lynch advisors can recommend specific investments or transactions, with compensation typically tied to individual trades rather than an annual fee based on assets under management.
Beyond these core offerings, Merrill Lynch Wealth Management provides a range of specialized services, including:
- Wealth Management: Comprehensive wealth management solutions tailored to individual financial objectives.
- Retirement Planning: Strategic planning and guidance to help clients achieve their retirement goals.
- Trust and Estate Planning: Advisors offer resources and assistance in trust and estate planning, leveraging Bank of America’s resources.
- Education Planning: Assistance in planning for educational expenses, ensuring a sound financial future for loved ones.
- Charitable Planning: Guidance on charitable giving strategies to maximize impact and tax benefits.
- Business Planning: Tailored solutions to address the unique financial needs of business owners.
- IRAs and 401(k) Rollovers: Support in managing retirement accounts, including rollover assistance.
- Insurance/Annuities: Access to insurance and annuity products to safeguard against unforeseen events.
- Pension Consulting Services: Consulting services to optimize pension plans for individuals and businesses.
- Selection of Other Advisors: Assistance in selecting other financial advisors or professionals based on specific needs and preferences.
With Merrill Lynch Wealth Management, clients gain access to a comprehensive range of financial services and expertise to navigate their financial journeys effectively.
How Merrill Lynch Wealth Management Allocates Your Investments
At Merrill Lynch Wealth Management, clients have the flexibility to choose the level of involvement they desire in managing their investments.
They can opt for discretionary authority, granting their advisor the autonomy to make investment decisions aligned with their goals and situation, while overseeing the day-to-day activities in the account.
Alternatively, clients may prefer non-discretionary guidance from their advisor, where they receive recommendations on investments and managers, retaining the final decision-making authority over their investment choices.
Upon initiation of the client-advisor relationship, clients engage in comprehensive discussions with their dedicated advisor to articulate personal and financial objectives, risk tolerance, time horizon, and other pertinent details.
Collaboratively, they determine specific target asset allocations tailored to the client’s needs.
Merrill Lynch offers nine distinct asset allocations, encompassing a spectrum from conservative to aggressive, including equity-focused, fixed income-focused, and alternative investment-focused options, along with the flexibility for custom allocation strategies.
The recommended investments within these allocations may span various asset classes, including individual stocks, bonds, exchange-traded funds (ETFs), mutual funds, annuities, cash, certificates of deposit, and alternative investments such as private equity and hedge funds. It’s worth noting that not all strategies provide access to the same range of investments.
For instance, the Merrill Guided Investing programs, available online, offer a limited selection of Merrill-managed strategies focusing on mutual funds, cash, and ETFs.
.Merrill Lynch Wealth Management Onboarding Process
- Locate an Advisor: To initiate the onboarding process, clients can utilize the advisor search tool available on the Merrill Lynch website. This tool allows individuals to input their location, specify their advisory needs, and indicate preferred advisor designations. Alternatively, clients can fill out a contact form to request an advisor to reach out to them. For immediate assistance, clients may also opt to contact the firm directly at 866-706-8321.
- Agreement Signing: Once clients have identified a suitable advisor, they are required to sign a written agreement outlining the services to be provided and associated charges.
- Goal and Portfolio Strategy Discussion: The advisor engages in comprehensive discussions with the client to understand their financial goals, risk tolerance, and time horizon. Together, they determine an optimal asset allocation and select suitable investment strategies.
- Ongoing Advisor Access: Clients have access to their advisor as needed for advice or adjustments to their investment plan.
- Regular Check-ins: In the traditional investment advisory program, advisors conduct periodic reviews with clients, typically at least annually, to evaluate account performance and discuss any necessary adjustments.
Merrill Lynch Wealth Management Locations
Merrill Lynch maintains a vast network of nearly 3,000 offices across the United States. Clients can utilize the advisor locator tool on the company’s website to find nearby office locations.
The firm is registered to serve clients in all 50 states, with the exception of Arizona, Massachusetts, and Oregon. Additionally, Merrill Lynch is authorized to serve investors in the District of Columbia and the Virgin Islands.
Is Merrill Lynch Wealth Management Right for You?
With its extensive network of over 27,000 advisors, Merrill Lynch offers a wide range of program options tailored to meet diverse client needs.
Prospective clients can choose from various program offerings, ranging from handing over account control to their advisor to retaining decision-making authority.
Additionally, Merrill Lynch provides flexibility in investment options, including strategies managed by Merrill professionals, individual stocks and bonds, third-party portfolio managers, and alternative investments.
It’s essential for potential clients to discuss fees with their advisor, as they can be negotiable and may vary among advisors offering similar services.
Moreover, clients should inquire about the advisor’s compensation structure to understand any potential conflicts of interest.
Since not every advisor offers the same services or investments, prospective clients should clarify upfront the services and options offered by their chosen advisor.
Before making a decision, it’s advisable to research multiple firms to ensure finding the right advisor to meet individual needs and preferences.
