Merrill Lynch's goals-based approach to wealth management is now the norm for the firm's 14,000 advisors and their clients. Michael Liersch, Merrill's director of behavioral finance, explains how the effort is coming along, the challenges advisors have faced adopting the approach and what's next. Liersch also discusses how clients have embraced values-based investing.

How's the roll out of goals-based wealth management going?

There has been extraordinary awareness and adoption from advisors and clients alike. You can see evidence of this in the rapid adoption of new goals-based technologies. Thousands of client goals have already been explored and built using our newly released Goal Explorer application. The interactive client-advisor dialogue that the application facilitates is captured on a tablet and feeds directly into the advisor workstation. At that point, goal feasibility can be evaluated by the advisor in the context of the client's investment strategy using various analysis tools available on their workstation. 

What have been the challenges of getting advisors to use this approach to working with clients, and how are clients responding?

Ultimately, the challenge is how to most effectively translate clients' qualitative thoughts and feelings into quantitative approaches. The challenge for an advisor, then, is in creating the capacity to learn about and integrate the ever-evolving goals-based tool-set into their practice to enhance their process. Advisors have been extremely open to this. As an example, thousands of advisors have used our Investment Personality Assessment, which examines clients' thoughts and feelings about investing. The assessment has been used with well over 50,000 clients, and the response has been overwhelmingly positive. Clients have been amazing collaborators in helping us understand what works best.

Can you talk a little more about how your advisors are facing these challenges?

At Merrill, we have taken a multi-faceted approach. From client advisory boards to advisor training to practice management consulting to innovative teaming structures to technological innovations. We are working to build a support infrastructure that enables advisors to serve clients using a goals-based approach.

What work remains ahead with implementing your goals-based approach to wealth management?

We are viewing our focus on a goals-based approach as ever-evolving, rather than as a one-time roll-out. In that vein, we are already looking ahead and asking ourselves, “How will things be different in three to five years? How can we create an infrastructure – whether it be platforms, technologies, and the like – that is flexible enough to adapt to our clients' evolving needs, concerns and goals?

Switching gears, how do your advisors approach clients about values-based investing? What are some of the more popular values-based investment opportunities that have emerged so far?

From a client's perspective, the most popular opportunity that has emerged so far in the values-based domain is not product or investment-centric. Instead, it is the opportunity to answer the question: What is the primary intent for my wealth? Many investors are surprised to realize that they have never explicitly been asked to articulate their primary intent in qualitative terms. Once empowered with this question, and after formulating a response, goals can be developed and strategies can be built that not only represent the investment selection that resonates with the client, such as investments that reflect a client's environmental, social and governance concerns, but can also allow the investment to do the job it's intended to do for that investor and their family to achieve their personally meaningful goals.

Millennials have shown more interest in values-based investing, than say Gen Xers and baby boomers. Why is there a generational difference? Will older generations catch up with the millennials?

Older generations are less familiar because they didn't grow up with readily available, structured, and viable investment opportunities in this domain.


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