Merrill Lynch has added a suite of pre-approved products to its dual-contract program that the wirehouse says will help advisors better cater to high-net-worth clients.

Premium Access Strategies, set to launch this month, will allow advisors to access third-party investment managers such as AllianceBernstein, BlackRock, Franklin Templeton, Lord Abbett, Natixis Investment Managers/Loomis Sayles, Nuveen and Pimco, according to a press release announcing the program. The investment managers have been vetted by Merrill’s home-office research team and can help tailor strategies to meet individuals’ specific goals. Clients negotiate management fees with the provider.

“Customization is becoming a much bigger part of the wealth-management landscape, so allowing advisors additional layers of flexibility is going to be appreciated,” said Matt Belnap, associate director of retail distribution at Cerulli Associates.

The program is intended for clients with at least $5 million in combined assets at Merrill and parent firm Bank of America or a total of $10 million or more in money to invest in, or outside of, Merrill and Bank of America.

Belnap noted that the fact advisors can negotiate the fees on behalf of clients is also an advantage, as they can help clients benefit from the scale within their practice or even the firm more broadly. Premium Access Strategies can be a powerful retention tool for Merrill, as advisors seek new ways to tailor investment products to their clients.

It can also help lure new advisors to the more than 18,800-strong “thundering herd,” one recruiter said.

“I think having the option to be dual contract is definitely helpful in recruiting advisors, because it allows the advisor or the client to negotiate a manager fee directly, rather than being stuck with the pricing that the firm has,” says Louis Diamond, president of advisor-recruiting firm Diamond Consultants.

“It might be helpful if, for instance, an advisor has a manager at a lower price from a competing firm, then at least they don’t have to raise the fee or eat into their own profits by having a higher fee at a new firm,” Diamond added.

Andrew Tasnady, owner of compensation consulting firm Tasnady Associates, sees a benefit for advisors but says that the firm will also benefit from the perception of offering greater flexibility.

Meanwhile, Rick Rummage, founder of The Rummage Group, a recruiter servicing wealth-management firms, suggested that broadening the platform is an important move to prevent breakaways who may consider registered investment advisor platforms as having greener product pastures.

“It’s really more of the wirehouses in general, all of them, losing assets to outside money-managers, RIAs,” said Rummage. “So they’re trying to get creative and have more flexibility so that doesn’t happen.”

By ensuring that the managers on the platform have been vetted by the due-diligence and research teams, Merrill also provides a layer of compliance and protects against advisors and clients being burned by strategies that may not have been reviewed as thoroughly.

Such risk is among the reasons wirehouse rival Morgan Stanley earlier this year informed advisors that unless they began using products pre-approved by the home office within the Investment Management Services dual-contract program, they could expect to take a hit in compensation. Advisors working with institutional clients are excepted from the July 2022 policy change.

Morgan Stanley’s Consulting and Evaluation Services offering, another dual-contract program, includes more than 700 strategies, all of which have been vetted and regularly reviewed by Morgan Stanley’s Global Investment Management Analysis unit.

The dual-contract separate account market represented about $936.5 billion industrywide as of the end of June, according to data from Cerulli Associates. That total is up about 17% from a year prior and 51.3% over two years.

With a total of about $555.5 billion in such accounts, Morgan Stanley dominates, taking a 59.3% market share, according to Cerulli data. Merrill is the sixth largest program, with about $13.2 billion and 1.4% of the dual-contract market. UBS and Wells Fargo have 3.4% and 2%, respectively, according to Cerulli.

RIA custodians Charles Schwab and Fidelity have the second- and third-largest programs, with 16.8% and 11.5%, respectively.

In an earnings call last month, Merrill Lynch Wealth Management president Andy Sieg said the firm added 97 experienced advisors for the quarter that ended September 30, a three-month period he called the firm’s “strongest recruiting quarter in over a decade.” Sieg had reported the addition of 93 experienced advisors the prior quarter.

In a press release announcing the launch of Premium Access Strategies, Keith Glenfield, head of investment solutions at Bank of America, stressed the program's benefit to the client. “The new offering is designed to address clients’ unique needs and provide further customization, all while being fully integrated into the Merrill Lynch One Platform,” Glenfield said.