Citing changing client preferences, Merrill Lynch is rolling out a new Wealth Management Banking Suite—with access to Bank of America products such as higher interest rate savings accounts and other benefits—with the goal of creating more holistic wealth management relationships.
In a memo to employees reviewed by WealthManagement.com, Andy Sieg, the head of Merrill Lynch Wealth Management, said the majority of high-net-worth individuals indicate they are interested in a more full-service relationship that includes their banking and investments. He also said 70 percent of high-net-worth millennials share that preference.
“Our connection with Bank of America offers Merrill Lynch enormous opportunities to better serve our clients,” Sieg wrote in the memo. “If each of us embraces these opportunities, I’m confident that we can leapfrog our competitors, while delivering a client experience second to none, for generations to come.”
Wealth Management Banking Suite is expected to launch later this week.
Merrill Lynch clients who are not already Bank of America customers will be receiving a letter from the brokerage detailing promotional offerings to encourage them to switch banks. A brokerage employee familiar with the matter said about half of Merrill Lynch clients bank with competitors and have roughly $200 billion in banking assets.
Brokerage clients who open a Bank of America checking account and open and maintain a savings account with at least $25,000 in new money with 30 days are eligible for a few perks. They can earn $200 cash back in the checking account when they set up direct deposits of $4,000 or more within 90 days. Their savings account will also be eligible for a fixed interest rate of 1.35 percent APY for 12 months on balances between $25,000 and $2 million.
Additionally, if customers apply for the Bank of America Premium Rewards credit card within 30 days of opening and funding the new accounts, the bank offers a $95 statement credit (effectively covering the card’s $95 annual fee for the first year).
Merrill Lynch advisors will not be compensated when clients participate in Wealth Management Banking or open Bank of America accounts or credit cards. However, when the brokerage altered its compensation plan in November, one aspect of the the new scheme for paying brokers for growth became product agnostic for both assets and liabilities, meaning any client’s new assets or liabilities with Bank of America would count toward their advisor’s performance hurdles.
The product perks are nice but might not necessarily stand out to Merrill Lynch customers. Anyone can apply for the Bank of America Premium Rewards credit card and there are comparable bank account options out there. For example, Goldman Sachs currently offers an online savings account with 1.5 percent APY and no minimum deposit. Although, that rate is not fixed, the bank doesn’t offer a checking account and a Merrill Lynch customer would then lack what many of them want out of Wealth Management Banking: the holistic management.
Another person familiar with Wealth Management Banking said improvements to the connectivity of the Merrill Lynch and Bank of America platforms are being made all the time. One benefit of participating in Wealth Management Banking, the person said, is improved cash flow management, assuming a Merrill Lynch client chooses to allow their advisor to view and access their Bank of America accounts.
That type of relationship and management is not unique but it does represent more high-touch services making their way downstream to more customers. Clients wealthy enough to qualify for any private banking relationship likely already have individuals advising and managing their banking, investments and other needs.
Since Merrill Lynch advisors might not fully be aware of any benefits available to clients through Bank of America (be it in the form of better rates on accounts or mortgages, or advice that includes banking services in general); the brokerage also plans to hire more banking specialists to work with them.
The brokerage has already hired more than 120 banking specialists around the country since the middle of last year. Most of the specialists have come from within Merrill Lynch, a person familiar with the hires said.