Bank of America Merrill Lynch is establishing an elite new designation for financial advisers who want to work with large 401(k) plan clients. The new designation is part of the bank’s push to become a bigger player in the retirement space.
The company also is introducing a Financial Wellness Monitor report that its advisers can use with plan sponsors to determine if their plan participants are on track for retirement.
The new retirement designation is part of BofA’s strategy to allow more advisers to specialize and, potentially, bring more revenue into other parts of the BofA businesses. In the coming months, advisers may be able to become cash flow experts, taxation specialists or experts in
trust and
estate planning, said Lyle LaMothe, head of U.S. division of Merrill Lynch’s wealth management group.
The bank announced in an internal memo in December that it would be creating new designations for advisers who service the retirement plan market. The first designation is the Retirement Plan Referral Network, which will include about 250 to 300 advisers with experience working with 401(k) plans in the $5 million to $10 million range, said Andrew Sieg, head of BofA Merrill’s retirement and philanthropic services unit.
The firm is also creating a more elite group, called Designated Defined Contribution Advisers. This group, which will include around 75 advisers, will serve plans in the $10 million to $250 million range, Mr. Sieg said.
“It used to be that anyone who had contact with a plan could make a pitch, but now we want to make it more specialized,” Mr. Sieg said.
Advisers can apply to qualify for the designation, but they need to have a certain number of large relationships already. Advisers who lack industry qualifications — such certified financial planner or certified investment management analyst — will also need to go through the lengthy process of gaining certification, Mr. Sieg said.
The advisers will also need to be interviewed by executives in the company’s retirement and philanthropy unit, as well as its global wealth management division. The firm expects to have the first group certified by the end of April, and it’s seen “strong interest” from advisers, he added.
These advisers will play a key part in shepherding small-business consumer-banking clients from the BofA side of the business to Merrill’s retirement-planning operation, Mr. Sieg said.
The company has created a team on the consumer-banking side to identify small-business clients with retirement plan needs. Those prospects that represent less than $10 million will go to an adviser in the Retirement Plan Referral Network, while bigger prospects will go to the Designated Defined Contribution Advisers, Mr. Sieg said.
As of the end of last year, the commercial bankers had passed on 1,000 prospects to retirement plan financial advisers. On the flip side, financial advisers have generated over 3,000 introductions to commercial bankers at BofA. The bank wouldn’t disclose its goals in terms of how much retirement plan business it hopes to bring in this year.
The new financial-wellness tool, which will be free to plan sponsor clients, calculates a score for plan participants, based on an array of characteristics, such as how much they are saving, what they are investing in and their loan balances. The tool can demonstrate, for example, if a plan participant is too heavily invested in company stock or using target date funds inappropriately, Mr. Sieg said. “There are so many times when a person will own several different target date funds,” he said.
BofA has about $400 billion in retirement assets from both individual and institutional clients.
