The goals-based platform requires advisors to re-evaluate how they manage assets for each client.
Boston, November 12, 2014 - A new report from Aite Group, Merrill Lynch One: Paving the Road to Goals-Based Wealth Management, indicates that as wealth management moves away from brokerage relationships to fee-based relationships, the importance of managing investments in accordance with client goals has increased. Merrill Lynch has been working on its goals-based wealth management strategy for four years and recently rolled out Merrill Lynch One, an entirely new managed account platform enabling advisors to manage client assets holistically and at the goal level. Aite Group has assessed whether Merrill Lynch’s undertaking will impact not only the firm but also the wealth management industry at large.
Aite Group's study is based on interviews with executives and advisors as well as a Q2 2014 Aite Group survey of over 400 U.S. financial advisors and outlines Merrill Lynch's significant commitment in its launch of Merrill Lynch One. Many large firms, including Merrill Lynch, Northern Trust, and U.S. Bank, are implementing new process and tools to deliver goals-based wealth management. A truly goals-based wealth management approach requires aligning and managing all client assets and liabilities toward clients' life priorities and goals. At its core, Merrill Lynch One is a platform that allows advisors to open, construct, and manage any type of fee-based account. This gives advisors the ability, for the first time, to manage fee-based assets at the relationship level through portfolios or groups of accounts.
Merrill Lynch One is just one piece of the firm's broader goals-based wealth management strategy, but it is likely to be the catalyst for true change because of the managed accounts offering's importance to advisors. It introduces significant workflow and client benefits in the form of more advisor client-facing time and a more transparent fee and investment management process. An important part of Merrill Lynch One's launch is the rollout of a custom managed investing strategy that offers a scalable and compliant practice for advisors who embrace the rep as portfolio manager approach.
Other important components of the strategy include a pioneering system for retirement planning known as Merrill Lynch Clear, Merrill Lynch’s Investment Personality Assessment questionnaire, and Wealth Outlook, the firm’s core capability for exploring various financial strategies and their impacts on future cash flow and ability to achieve goals. Goals-based wealth management will integrate all of these capabilities into one continuous wealth management process that centers on helping clients achieve successful outcomes aligned to their life priorities.
"Growing fee-based advisory relationships and aligning them to goals requires significant system changes; firms that take an incremental approach will be left out of the race to deliver true goals-based wealth management, while Tier-1 firms that take a bold approach with the launch of a new platform, like Merrill Lynch has done, will set the pace for the industry," says Alois Pirker, research director in Wealth Management at Aite Group.