Bank of America Merrill Lynch is launching new defined contribution investment consulting services and financial advisor accreditation aimed at helping its corporate retirement plan sponsor clients manage fiduciary risk.
The consulting services will address defined contribution plans, which include 401(k), ERISA, 403(b), profit sharing and money purchase plans. Through the services, Bank of America will help the plan sponsor with menu design, due diligence and investment option recommendations and working to monitor those investments as a fiduciary.
The firm also plans to help its plan sponsors educate participants on the 401(k) and defined benefit plans they participate in.
The new services will become available this year and next year to institutional clients $25 million or more in defined contribution plan assets. Bank of America decided to start with those clients by first aiming at its middle market client base.
“We feel like the market is extremely demanding for these types of services,” said Steve Ulian, head of institutional retirement relationship management for Bank of America Merrill Lynch. “Our estimate is that the market is approximately $1.2 trillion of defined contribution assets that are actively seeking these types of services.”
Of those $1.2 trillion in assets, the top 25 consultants now represent about 92% of the overall market, Ulian estimates. The top 10 consultants, in turn, represent about 77% of the market.
Bank of America has an advantage, Ulian said, with the ability of its investment management and guidance organization to do the due diligence and screen and monitor, combined with the backing of its large multinational corporation.
Bank of America is also launching a new accreditation for select advisors who want to become more specialized in these services. The number of advisors who will go through the training in this first year will probably range from 30 to 50, said Kevin Crain, head of institutional retirement and benefit services at Bank of America Merrill Lynch.
To qualify, advisors have to already be either designated defined contribution advisors or global investment consultant advisors. They also have to already have Certified Investment Management Analyst or Chartered Financial Analyst designation.
“There’s a different level of risk for this business, even as a 3(21) fiduciary,” Crain said. “That’s why the standards are higher and the funnel will be a bit narrower in terms of the number of people that will do this versus the retirement plan space.”
Both the new consulting service and advisor designation cap off Bank of America’s institutional retirement business relaunch last fall. Ultimately, the new service and designation is expected to help the firm both retain and recruit advisors with these focuses, according to Crain.
That comes as the firm just had an annual meeting with its advisors who have earned a new designation focusing on middle to large market plan business. That group has added 20 newly designated advisors and about $2 billion in new business this year, Crain said.
“There’s proof that this whole focus and attention and specialization of advisors to certain spaces certainly helps us,” Crain said, and “keeps the advisors very engaged and energized about building robust retirement practices.”
Lorie Konish writes for On Wall Street.
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