Review of Merrill Lynch Wealth Management

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Updated on Tuesday, June 16, 2020

Merrill Lynch Wealth Management is the branded name for the wealth management division of Bank of America Corporation. The division offers, among other services, registered investment advisory services to individual investors, as well as high net worth investors, businesses, pension plans and other institutions. Its team of nearly 27,000 investment advisory employees is spread across more than 3,200 offices nationwide and responsible for more than $962 billion assets under management (AUM).

All information included in this profile is accurate as of June 16, 2020. For more information, please consult Merrill Lynch Wealth Management’s website.

Assets under management: $962,052,205,321
Minimum investment: No minimum investment required, although certain managed strategies and account types may include minimums
Fee structure: A percentage of AUM; fixed fees; commissions
Headquarters location: One Bryant Park
New York, NY 10036
(800) 637-7455

Overview of Merrill Lynch Wealth Management

Merrill Lynch Wealth Management is the brand within parent company Bank of America Corporation that provides investment and wealth management services. Bank of America Corp. agreed to purchase Merrill Lynch and its more than 16,000 financial advisors in 2008 in the depths of the financial crisis, and the combined firms created the largest brokerage business in the country at that time. However, each firm’s origins go back much further though, with Bank of America’s history tracing back more than 240 years and the Merrill brokerage shop opening its doors on Wall Street in 1914.

Today, Merrill Lynch Wealth Management’s investment advisory business is formally registered with regulators under the names Merrill Lynch, Pierce, Fenner and Smith Incorporated, as well as Managed Account Advisors, LLC. The former is licensed as a broker-dealer as well.

What types of clients does Merrill Lynch Wealth Management serve?

A diverse mix of clients enlist Merrill Lynch Wealth Management for services, including individuals, high net worth investors (defined by the SEC as those with more than $750,000 in assets under management or a net worth of more than $1.5 million), businesses, charitable organizations, pension plans and others.

The firm does not have an across-the-board minimum investment requirement to open an account, though certain programs or investment strategies may require a minimum, however. For example, the robo-advisory account dubbed Merrill Guided Investing account requires a minimum of $5,000 for a strategy. On the other end of the spectrum, the Managed Account Service, which allows clients to choose their own preferred managers not available elsewhere through Merrill’s advisory program, requires a minimum of $100,000. The Strategic Portfolio Advisor Service, in which Merrill recommends certain managers for a client to consider, has a minimum of $2 million, though advisors have the discretion to waive it.

Services offered by Merrill Lynch Wealth Management

Merrill Lynch Wealth Management provides investment management and financial planning services through many different programs.

At the most basic level, the Merrill Guided Investing robo-advisor program offers clients with as little as $5,000 the option to receive virtual help with setting goals and managing their portfolios. For a minimum investment of $20,000, clients can add on to that online program, with a financial advisor who assists in establishing those goals and determining investment priorities.

Clients interested in having an in-person relationship can look to the more traditional Investment Advisory Program, where a dedicated financial advisor helps clients determine goals and can manage their investment portfolio using a broad mix of potential investments. The firm also features programs that give clients access to third-party investment managers, who can be identified by a client’s financial advisor or chosen independently by the client.

Finally, the team is also registered as broker-dealers. Advisors can recommend specific investments or transactions but are compensated per trade, instead of by an annual fee based on the client’s assets under management.

Here is a full list of services offered:

  • Investment advisory services/portfolio management (separately managed/wrap fee accounts; discretionary/non-discretionary)
  • Financial planning
    • Retirement planning
    • Trust and estate planning (advisors can share resources available through Bank of America)
    • Charitable planning
    • Education planning
    • Business planning
    • Spending analysis and budgeting
    • Long-term care planning
    • IRAs and 401(k) rollovers
  • Insurance/risk management
  • Pension consulting services
  • Brokerage services

How Merrill Lynch Wealth Management invests your money

Clients can choose to give their advisor discretionary authority over their account, meaning the advisor chooses the investments based on the client’s goals and situation and handles the day-to-day activity in the account. Advisors can create custom accounts or choose managed strategies. Alternatively, clients can choose to get guidance from their advisor about what investments and managers may work for them, and then the client can make the final decisions around how to invest their money, which is a non-discretionary arrangement.

When starting a relationship with a dedicated advisor, clients will share their personal and financial goals and objectives, risk tolerance, time horizon and other key details. The advisor works with the client to choose specific target asset allocations. Typically, clients choose one or multiple, depending on their number of accounts, of the firm’s nine offered asset allocations:

  • Conservative
  • Moderately conservative
  • Moderate
  • Moderately aggressive
  • Aggressive
  • Equity-focused
  • Fixed income-focused
  • Alternative investment-focused
  • Custom allocation

Finally, the advisor recommends specific investments. Potential choices include third-party and Merrill-managed strategies, as well as individual stocks, bonds, exchange-traded funds (ETFs), mutual funds, annuities and alternative investments, such as private equity and hedge funds.

The online Merrill Guided Investing programs offer only a limited number of Merrill-managed strategies that invest in mutual funds and ETFs. In the Managed Account Service program, the client selects the external managers and provides those managers control of the accounts.

Fees Merrill Lynch Wealth Management charges for its services

Most of Merrill Lynch Wealth Management’s programs, with a few exceptions, charge an annual fee calculated as a percentage of assets under management. The fee is negotiated directly with each advisor, and largely depends on the advisor and the amount of money the client has invested with the advisor. The maximum fee paid to Merrill is typically 2%, though clients who select certain managers may pay an additional management fee, generally up to 0.65%.

Certain programs have standard fee schedules, as shown in the table below:

Merrill Lynch Wealth Management Program Fee Schedules
Program Name Annual Fee
Merrill Guided Investing 0.45%
Merrill Guided Investing, with the help of a dedicated advisor 0.85%
Strategic Portfolio Advisor Service 0.40% to 1.50%
Managed Account Service 0.45% to 1.80%

The fee typically serves as a wrap fee, meaning it covers the advisory, brokerage and custody costs. When advisors use other brokerage firms to place transactions, the client may pay a transaction charge. Clients are responsible for internal fees for mutual funds, exchange-traded funds and annuities.

Fees are generally paid in advance, either quarterly or monthly.

Merrill Lynch Wealth Management’s highlights

  • A broad menu of programs: The firm offers something for just about everyone. Clients can choose how involved they want to be in the management of their account, with the option of discretionary or non-discretionary accounts. They can opt for accounts with limited investment choices, a broad mix of individual securities and even alternative investments, and with third-party managers or Merrill managers.
  • Accessible nationwide: The firm provides registered investment advisory and broker-dealer services from more than 3,200 offices around the country, giving it a national footprint. This makes it easier to meet in-person with your advisor, regardless of which region of the country you live in.
  • Access to internal research: To guide their investment decisions, financial advisors at Merrill Lynch Wealth Management can turn to the securities research and industry insights published by analysts, economists and researchers in the larger Bank of America Merrill Lynch network. BofA Merrill Lynch Global Research was named the top global research firm in 2019 by Institutional Investor for the seventh time since the ranking began in 2011.
  • A digital advisory program with or without an advisor: Clients who are comfortable using online tools that are looking for a low-cost program could consider the Merrill Guided programs. The robo-advisory tool runs 0.45% of assets under management, or 0.85% if you want a financial advisor to assist you in identifying your goals and suitable investment options. Certain Bank of America customers are eligible for a discounted rate.
  • National recognition: The firm’s advisors show up on many prominent best-of lists in the financial services industry. Most recently, the firm had the most advisors on the 2020 Barron’s Top 1,200 Financial Advisors list for the 12th consecutive year.

Merrill Lynch Wealth Management’s downsides

  • Difficult to determine fees in advance: The firm offers no standardized fee schedule for certain advisory programs, meaning clients must spend the time shopping various financial advisors before they can learn how much they’ll pay. Advisors are typically allowed to charge up to a maximum of 2% of assets under management. Advisor fees approaching that 2% run on the high end of the spectrum. For comparison, the average advisory fee in 2019 ran about 1.17%, according to an industry study by RIA in a Box.
  • Not every advisor offers each service: Advisors don’t always offer every program service available to clients. Clients must discuss with each advisor to learn the services provided by the advisor.
  • Potential conflicts of interest: The firm has a financial incentive to recommend its own products as well as funds that pay the firm the highest fee. The firm also stands to earn money when clients take out a loan against their account. Since many advisors are also registered as broker-dealers and insurance agents, they can also earn compensation by selling you specific securities and insurance products. This presents potential conflicts of interest, as advisors may be financially incentivized to make certain recommendations.
  • Pays for referrals: The firm compensates a handful of third parties to send prospective clients its way. The compensation typically comes out of the advisory fee paid by the client that otherwise would go to the advisor, for as long as the account remains open.
  • Long list of disciplinary disclosures: The firm discloses hundreds of disciplinary items. See more below.

Merrill Lynch Wealth Management disciplinary disclosures

The SEC requires all registered investment advisors to disclose in their Form ADV paperwork any legal or disciplinary actions taken against the firm, its employees or its affiliates over the last 10 years that would be material in evaluating the firm or its management team. Merrill Lynch, Smith, Fenner and Pierce, the registered name of the advisory and broker business, discloses hundreds of pages of findings against it, its predecessor firms and select affiliated individuals.

The firm, which self-reported some of these issues, settled with the SEC, FINRA and state regulators in many cases without admitting or denying the allegations. A few of the settlement accusations include:

  • In 2014, the firm settled FINRA allegations, without admitting or denying them, that it failed to ensure certain sales charges were waived for clients who purchased certain mutual funds’ Class A shares in some retirement and brokerage accounts. The firm paid an $8 million fine and agreed to additional reimbursements for impacted clients.
  • In 2012, the firm paid a $2.8 million fine in a settlement with FINRA, without admitting or denying the findings, in relation to allegations that the firm did not adequately supervise the billing process and overcharged certain clients from 2003 to 2011. It was also alleged that the firm did not send trade confirmations to certain clients in 10 advisory programs, among other issues. All overcharged accounts were reimbursed.
  • In 2011, the firm settled allegations from FINRA, without admitting or denying them, that it did not appropriately supervise and monitor accounts for misconduct when employees controlled the accounts or had a financial interest in them. A registered representative was found to have used a business account at the firm to implement a fraudulent scheme. The firm paid a $1 million fine.
  • In 2009 and 2012, federal and state regulators alleged that in the sales and marketing of auction rate securities, customers were misled about the nature and risks associated, including illiquidity. The firm entered numerous settlements and paid more than $175 millions in fines and penalties.

Merrill Lynch Wealth Management onboarding process

To learn if there is a Merrill Lynch advisor near you, you can use this search tool provided on the company’s website. It requests information including your location, what you need help with and what designations you’d like your advisor to have.

Once clients decide they want to move forward with a particular advisor, they must sign a written agreement that lays out the services the advisor will provide and what they’ll charge. How often clients will hear from the firm varies by program — for example, in the traditional investment advisory program, advisors check in with clients at least annually to review their accounts.

Is Merrill Lynch Wealth Management right for you?

For decades, the Merrill brand has been known for its “thundering herd,” which refers to its vast network of thousands of brokers. Thus, clients starting a search for a local advisor may find one of the team’s nearly 27,000 advisors in their area. As for the specific offerings, clients will find a broad menu of program offerings that allow clients flexibility in how they want to interact with their advisor. For example, clients can choose to hand over control of their account to their advisor, or they can opt to retain the day-to-day decision making. They can stick with a limited number of strategies managed by Merrill professionals, or branch out into other individual stocks and bonds, third-party portfolio managers and even alternative investments.

Potential clients should make a point to discuss fees with their advisor, since they are often negotiable and can vary for similar services from advisor to advisor. Also, clients should be sure to ask how the advisor earns money for the products they recommend, since they can earn compensation for selling certain investments and thus have a potential conflict of interest. Additionally, not every advisor offers each service or investment, making it important for potential clients to find out upfront what an advisor does and does not offer.

Whenever clients are considering new investment choices or financial advisors, it’s their job to ask pointed questions about costs and compensation. At the end of the day, a client’s account value is determined not just by investment performance, but also the value of industry fees and charges deducted.

The “Find a Financial Advisor” links contained in this article will direct you to webpages devoted to MagnifyMoney Advisor (“MMA”). After completing a brief questionnaire, you will be matched with certain financial advisers who participate in MMA’s referral program, which may or may not include the investment advisers discussed.