To attract assets and customers, Bank of America Merrill Lynch has introduced a tool to help employers score how well employees are doing at saving for retirement.

The new tool, Financial Wellness Monitor, which was introduced Thursday, is being offered free to employers. It calculates an overall “financial wellness score” indicating to employers whether employees are exhibiting behaviors within their 401(k) plan that may lead to successful long-term savings.

The metrics are based on how much employees are saving, if they are well-diversified, if they are using target date funds appropriately, and how they are using the company match.

Kevin Crain, the head of institutional client relationships for BoA Merrill Lynch, said the company began to examine its 401(k) business 12 to 18 months ago and wanted to find a way to “quantify retirement wellness.”

“We found that we could offer a lot of nice summaries, but we needed a way to really score things,” he said in an interview. “We wanted to create something that wasn’t hard for plan sponsors to understand and that focused on key metrics.”

Bank of America Merrill Lynch began beta testing the service last year with 300 clients that use the banking company’s advice tool, Advisor Access Solution, which specifically recommends savings options to employees.

Financial Wellness Monitor scores employers plans on a scale of one to 10. Crain said the beta-testing illustrated a wide range of scores. He said twice as many plans that scored “well” use a combination of auto enrollment and automatic increase features, but plans that didn’t score as highly have higher opt-out rates when it comes to automatic enrollment.

Employees that score high are using the advice tools, Crain said. The average score for employees that used advice tools to make retirement planning decisions was an 8.5, but the average score for those that didn’t was a 6.2.

“I think that the results definitely highlighted the story that we theorized: advice is critical,” he said.

Financial Wellness Monitor can be run on a quarterly basis, Crain said, and will provide trend data to illustrate how employees and employers are improving – or not improving – their retirement savings.

Crain said he is interested in measuring a broader group of employers. “I think we are going to find that some are well and healthy and others that don’t do as well aren’t using the advice,” he said. “I think this tool is a good way to show the value of the defined contribution system. It can be a successful system.”

These results could enable BoA Merrill Lynch to cross-sell additional services to employers, Crain said, and hopefully make it attractive for new customers.

“As we carefully look at the issue of client retention and increasing client relationships, we have done studies that show that clients longer when they are satisfied with the services and products they are getting,” he said. “This tool will help us target plans that are not as healthy. If we get more people involved that will lead to more growth as well. I think this is going to provide opportunities to develop our existing client base in a meaningful way and I hope if we get strong, healthy clients they will help us draw more employers and more clients.”

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