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Merrill Lynch Rolls Out Robo-Advisor

February 9, 2017

Merrill Lynch has launched its robo-advisor, paving the way for the wirehouse to capture clients for whom traditional financial advice is too expensive, the Wall Street Journal writes.

Merrill Edge Guided Investing requires a minimum $5,000 investment and charges 0.45% of assets under management annually, according to the Journal. By contrast, Merrill Lynch brokers typically charge up to 1% for their services and have been encouraged to refer clients with less than $250,000 to Merrill Edge, the online brokerage launched in 2010, according to the paper. Merrill Edge’s robo works much the same as other digital platforms, having clients fill out questionnaires for a recommendation of a portfolio of ETFs, the Journal writes. But while some robo-advice platforms rely on automatic portfolio rebalancing the Merrill Edge robo will be overseen by investment managers who will tailor asset allocations based on input from the chief investment office of Merrill Lynch and U.S. Trust, the private bank that shares the same parent company, Bank of America.

The new platform will let Merrill go through with earlier plans to stop offering commission-based retirement accounts as part of its bid to comply with the Department of Labor’s fiduciary rule, the Journal writes. The rule, which requires retirement brokers to put clients’ interests ahead of their own, was slated to go into effect in April. Last week, President Donald Trump had issued a memorandum requesting the DOL review the rule, signaling an almost certain delay or even repeal of the rule. But Merrill said it plans to go through with the change regardless, as reported previously.

Merrill Lynch is the first among big brokerages to unveil a robo-advisor, the Journal writes. Wells Fargo plans to start piloting a digital service this year and UBS has also announced plans to release a robo platform. Last month Morgan Stanley CEO James Gorman said his firm wants to offer a digital-only way for clients to access its wealth management offerings, according to the paper.

By Alex Padalka
  • To read the Wall Street Journal article cited in this story, click here.