Merrill Lynch debuts robo-platform for clients with at least $5,000 to invest

Familiar financial giants are doing well attracting investor assets on digital platforms

Feb 8, 2017 @ 1:38 pm

By Liz Skinner

Another potential giant in the digital advice space launched on Wednesday with Merrill Lynch's robo-platform opening up for clients who have at least $5,000 to invest with the Bank of America unit.

Merrill Edge Guided Investing offers digital onboarding, portfolio recommendations and investing for an annual fee of 0.45%, plus fees charged on underlying funds in the portfolio. The exchange-traded funds available to investors have been evaluated by Merrill Lynch's investment team and will be managed by them, not a computer, according to the firm.

The new offering is expected to be a hit with investors attracted to the familiar Merrill Lynch brand, though it does not include live advisers who clients can call for help about their investment portfolios.

“Investing online isn't the same thing as other businesses like books or shoes,” said Craig Iskowitz, founder of Ezra Group, a technology consulting firm in the financial advice industry. “Brand name plays a large role of whether someone will sign up and click a button to give you their life savings, or even a portion of it.”

Traditional financial brands have had the biggest success among digitally-based financial advice platforms.

Vanguard's Personal Advisor Services, which provides some live advice with its digital platform, has amassed about $52 billion in assets since it was introduced in May 2015, and Charles Schwab's Intelligent Portfolios and its Institutional Intelligent Portfolios has attracted about $12.3 billion since March 2015. In comparison, two of the largest firms that created automated platforms from scratch, Betterment and Wealthfront, have attracted $7.4 billion and about $5.1 billion in assets, respectively.

(More: Getting a handle on robo advisers returns)

“Names like Vanguard, Charles Schwab, Fidelity and Merrill Lynch, have a lot of impact and gravitas,” Mr. Iskowitz said. “People who are looking to invest for the first time are going to seek out names that they recognize and perceive as safe.”

Most of the established robo-advisers have found that they need to include some form of live planning and investment help if they want to attract large clients. For instance, Betterment recently created a more expensive service for investors who want someone to call or email for help.

Merrill Lynch pointed out in its statement about the platform that it incorporates human advice into the process, though investors will not be able to call those experts directly.

Clients identify an investing goal and provide other information about themselves, receive an investment strategy designed by Merrill Lynch investment experts, and then are given options to open and fund the account, the statement said.

(More: SEC announces 2017 exam priorities, adds robo advisers to list)

“Merrill Edge Guided Investing is our way of bringing together advice and technology to create stronger relationships with investors,” said Aron Levine, head of Merrill Edge, the company's self-directed brokerage platform.

Both Merrill Edge platforms are aimed at smaller investment clients. Working with a traditional Merrill Lynch broker typically requires a minimum of $250,000.

Merrill Edge clients who have at least $20,000 invested can get live financial help about their portfolios for an annual fee of 85 basis points, according to David Poole, head of Merrill Edge Advisory and Client Services.


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