Merrill Edge Seeks to Pull Money to Its Advisors—from Robo Investors
Bank of America’s Merrill Edge unit is testing a pilot aimed at introducing mass affluent clients who invest solely through its Merrill Guided Investing “robo” program to an advisor, at a higher price.
Customers who now pay 45 basis points of assets managed in the firm’s Guided Investing robo portfolio of mutual- and exchange-traded funds will be able to consult with one of Edge’s just over 2,600 advisors by paying another 40 basis points for advice on their goals, time horizons and risk tolerance.
“We’re piloting with a small group of internal employees a new offering for mass affluent clients that combines a robust digital experience with focused human advice,” Merrill spokeswoman Susan Atran wrote in an email. “We will learn from the pilot experience before expanding the offering further to ensure the digital experience meets the needs of clients in this segment.”
Merrill Edge, whose revenue is booked within Bank of America’s consumer banking division, held $200 billion of customer assets as of September 30, up 22% from a year earlier. Assets there have been growing at a faster pace than at at the Global Wealth Management division that includes Merrill Wealth Management’s traditional brokers.
Edge does not break out how much money sits in the Guided Investing robo that was launched in February 2017. The program was introduced, in part, to hold commission account retirement money that Merrill Lynch Wealth was directing away from advisors in anticipation of the now-vacated DOL Fiduciary Rule.
Guided Investing with Advisor was detailed in an ADV disclosure filed early this month with the Securities and Exchange Commission. Edge investors can currently work with advisors if they pay the 0.85% fee and have at least $20,000 in their accounts. The minimum investment for the self-directed robo unit is $5,000 and $20,000 for the advised option.
Merrill’s wealth management unit of 14,838 brokers cater to wealthier investors than those solicited for Edge, and do not get paid on accounts with less than $250,000. Wealth advisors have been paid in the past for directing less affluent clients to Edge advisors, but Atran said it is “too early to speculate” about such incentives for the new program.
Betterment LLC, one of the earliest pure robo offerings that charges a flat fee of 0.25% of assets with no minimum account requirement, last year introduced a “premium” platform with access to advisors for a 0.40% fee and a $100,000 minimum investment.
On the other end of the scale, Vanguard Investments ’s Personal Advisor Services–the largest robo with more than $110 billion of assets seeded largely by Vanguard fund investors–offers consultation with a certified financial planner for a minimum investment of $50,000 and fees of 0.05% to 0.30% of assets, according to its ADV brochure.