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BofA considering subscription model for Merrill Edge

Bank of America is “absolutely” considering creating a subscription service for its Merrill Edge service, potentially making it the second major Wall Street player to offer clients a nontraditional way to pay for wealth management services.

“Clients are simply getting used to paying to subscriptions. It’s a logical next step. It’s just a question of getting the pricing right,” says Teron Douglas, head of digital capabilities at Merrill Edge, who was speaking at SourceMedia’s In|Vest conference in New York.

Douglas, who was responding to an audience member’s question, noted there’s precedence for such a move, observing that Schwab and some fintech firms have already put forward such offerings.

In April, Charles Schwab introduced a subscription pricing model, which has gained traction with clients. The company’s robo advisor added $1 billion in new client assets in the last three months, according to Bernie Clark, head of Schwab’s RIA channel. Thirty-seven percent of clients are new customers, says Clark, who also spoke at In|Vest.

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Bank of America Corp. signage is displayed at a branch in New York, U.S., on Tuesday, Sept. 3, 2013. Bank of America Corp. rose in New York trading after setting a $1.5 billion goal for its sale of China Construction Bank Corp. shares, a deal that will end an eight-year investment in the Chinese lender. Photographer: Ron Antonelli/Bloomberg via Getty Images

Bank of America, meanwhile, has been expanding its range of wealth management offerings. In June, the company added a digital-plus-human-advisor option dubbed “Merrill Guided Investing with an advisor.” The bank already offered a DIY platform (Merrill Edge), a robo advisor (Merrill Edge Guided Investing) and its traditional Merrill Lynch financial advisors.

The new digital-plus-human offering has a $20,000 account minimum and charges an annual fee of 0.85%, compared to a $5,000 minimum and an annual fee of 0.45% for the purely digital version. Discounts are available for members of Bank of America’s preferred rewards program.

A subscription model could resemble what cable companies offer: a basic plan with options to add more services as clients need or want — for a fee, of course.

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