Does Merrill Edge, Merrill Lynch's brokerage, banking and financial advice platform for the mass affluent, compete directly with Merrill financial advisors? We couldn't get a straight yes or no from Prasad, but that's probably because the truth is, sure, a little bit. And yet, Prasad says Merrill Edge is also sending referrals back to FAs.
Registered Rep.: Does Merrill Edge compete with Merrill financial advisors?
Alok Prasad: Since the launch of Merrill Edge in the summer of 2010, we have had pretty good success. We're getting 20 percent account growth, 20 percent asset growth. Our approach when we launched Merrill Edge was to step back and take a look at the needs of mass affluent clients, those with $250,000 or less. So far it has proven to be very successful. the client feedback has been phenomenal.
RR: Does Merrill Edge also have HNW clients on this platform?
AP: We do have some of them. Those are clients who are picking us for some of the tools and trading capabilities that we provide. Don't know the exact number but I would definitely classify them as the minority. The bulk of our clients have under $250,000 in assets. If someone has more complex needs they go to our FAs. There are also clients who are advice clients who choose to do a portion of their investments on Merrill Edge, who enjoy their own financial analysis, who enjoy some of their own trading, but like their long-term assets to be managed by an FA.
RR: To what extent do new assets come from Merrill FAs versus from the banking channel or retirement account rollovers?
AP: Year-over-year, the biggest growth is coming from our consumer channels. Our consumer referrals are up over 260 percent. But they are now very well balanced out in terms of the flow of clients from each of those channels — not exactly one-third each, but they are pretty comparable with each other.
RR: Have you begun referring Merrill Edge clients back to FAs?
AP: Oh, absolutely. The volume has been consistently increasing. We have seen a 15 percent increase since the launch in terms of referrals, on both sides.
RR: Are there incentives for FAs to send clients to Merrill Edge?
AP: Yes. Depending on whether the client is looking for self directed or wants advice, it's based on assets that the client brings in, and it's a one-time payout on assets when the assets are brought in. There's a framework there, that ranges anywhere from 30 basis points to 120 basis points. It's a framework that we use to make sure we compensate our FAs appropriately.
RR: Is there a potential job path for FSAs to move into an FA role?
AP: Absolutely, that is part of the strategy. To give them the experience and know-how to work with clients and over time if the FSA wants to be an FA, absolutely, there's a career path there.