Merrill Edge: Online Broker, or Innovative Business Model for the Mass Affluent?
Report Summary
Merrill Edge: Online Broker, or Innovative Business Model for the Mass Affluent?
Merrill Edge is well-positioned for meaningful growth in a short time frame, with the potential to grow by more than 1 million accounts within the next three years.
Boston, December 1, 2010 – A new report from Aite Group examines Merrill Edge, Bank of America Merrill Lynch’s online platform for the lower-tier mass-affluent customer segment, and analyzes how this offering enhances Bank of America Merrill Lynch’s strategy for organic growth. The report discusses Merrill Edge’s combination of self-directed investing and traditional advising into a single offering. It also describes the platform’s merits and risks.
The recent financial crisis resulted in a shift in consumer behavior, with consumers citing an increased desire for self-directed investing. As a result, the new entities that emerged from crisis-related M&A activity are exploring business models that cater to these changing consumer preferences. Merrill Edge, Bank of America Merrill Lynch’s solution, is geared toward investors with less than US$250,000 in investable assets. Supported by Bank of America’s massive retail banking infrastructure, the solution combines the advisory expertise of Merrill Lynch with a full suite of banking and investment solutions to address mass-affluent customers’ financial needs through low-cost sales and service channels. While the solution is currently small compared with more established online brokerage platforms, Merrill Edge is well-positioned for meaningful growth in a short time frame, with the potential to grow by more than 1 million accounts within the next three years. The online platform could possibly surpass US$100 billion in assets in that time.
“The verdict is still out on whether Merrill Edge will deliver on its ambitious promises, which are largely dependent on the commitment of Bank of America’s consumer bank and full-service brokerage arm,” says Sophie Schmitt, senior analyst with Aite Group and co-author of this report. “One thing is certain: The launch of this platform by Bank of America and Merrill Lynch, two dominant franchises in their respective industries, will have a lasting impact on the wealth management space. Competing wealth management firms are advised to review their own strategies for the mass-affluent market and take a position in response to Merrill Edge.”
This 25-page Impact Note contains 12 figures and one table. Clients of Aite Group's Wealth Management service can download the report.