Q: How has the innovation process worked inside Merrill Lynch — what’s worked, and what needs to get better?
It’s impossible to deliver relevant, innovative solutions without knowing which problems you are trying to solve. This entails constant communication with advisors and advisory councils and direct monitoring of feedback from our clients. We have a number of councils that act as advocates for technology and participate in regular focus groups. We are constantly traveling the country, listening to advisors and their support staff for pain points and suggesting technology solutions. The information gathered during this part of the process is integral to providing direction for future innovation.
Most importantly, we work collaboratively across business and technology teams to explore and test ideas. We find that many solutions which were designed for one purpose can be applied to others, sometimes more effectively than the original purpose.
You’re going to speak at In|Vest about how Merrill has rebundled its wealth management and banking services. How has it done this compared to its competitors?
A key differentiator for Merrill Lynch is its access to banking solutions through Bank of America. Industry research shows that many clients prefer all-encompassing, full-service wealth management. In fact, a majority of those with more than $1 million in assets want their banking and investment services accessible in one place, including approximately 70% of millennials. Providing an integrated banking and brokerage experience is a key pillar of our digital strategy, which truly sets Bank of America and Merrill Lynch apart from our competitors.
We have developed an integrated digital experience across banking and investing, which gives clients a range of functionality across our apps. We are continuing to evolve this experience, but a few examples of the combined power of an enterprise platform include: ability to view all banking and investment accounts in one place; real-time transfers between Bank of America and Merrill Lynch accounts; ability to send or receive money real-time to family and friends via Zelle; financial wellness tools incorporating bank and brokerage activity; and seamless navigation between Bank of America and Merrill Lynch mobile apps.
Is this enough though to compete with fintechs who are also rebundling their packages as they grow — from micro-investing, to trading, to savings?
Yes. The advantages available to Merrill Lynch with respect to our relationship with Bank of America are staggering. There are over 10 million Bank of America clients with over $6 trillion in investable assets held outside of Merrill Lynch. Conversely, Merrill Lynch clients hold over $200 billion in deposits at outside institutions, and approximately 60% of our clients do not have either a Bank of America mortgage or credit card. As we continue to connect clients across the enterprise (including Bank of America, Merrill Edge, U.S. Trust, Global Banking & Markets, commercial banking, business banking), the synergies and possibilities are almost endless.
We are in a strong position to compete with both fintech startups and more established competitors. Both are following our lead; we’ve been offering online investing, including free trading opportunities, even prior to the launch of Merrill Edge in 2010, and that offering has grown to more than $200 billion in AUM today. We were among the first to launch an online advisory platform, Merrill Guided Investing, in 2017. The combination of Merrill Lynch and Bank of America helps clients to manage all aspects of their financial lives on both sides of the balance sheet. Our goal is to serve clients across the entire wealth management spectrum, whether they have a little or a lot to invest, and whether they prefer to do so online, in a financial center or through a one-to-one relationship with a financial advisor.
Talk about your outlook for wealth management as it changes due to digital innovation. What are the areas that you’re watching closely?
While digital innovation is fundamentally changing the wealth management landscape, we do not believe technology will ever replace the personal relationship at the foundation of Merrill Lynch’s value proposition. We view the role of technology as fundamentally strengthening the relationship between clients and advisors.
Consider the trust a client places in a financial services provider to keep their personal information secure. Digital technology is a solution to this core need for security. By utilizing biometric capabilities such as Touch ID and Face ID, along with optional multi-factor authentication, client accounts are becoming increasingly secure. Digital capabilities also provide a solution to the most basic kind of security breach; the unsecure passing of personal information via paper mail. Leveraging a range of functionality — eSignature, secure message center and mobile document scanning — clients are able to completely bypass the need to deal with paper.
Additionally, in an age of instant messaging, clients expect to be able to contact their advisor when and how they want. Our digital platforms keep the advisor at the forefront of the client experience — omnipresent to call or email at any moment. Earlier this year we became one the first firms to allow clients to text their advisor (via business phone number) in a compliant manner. And we continue to explore a range of capabilities in the areas of messaging, digital collaboration and natural language processing to make our clients’ interactions easier.
We are also exploring enhancements in a range of areas across deep analytics, proactive client and advisor insights and more intelligent applications across our advisor workstation and client relationship management.
A number of firms have grappled with twin forces of fee pressure and new innovation costs. How has Merrill sought to balance the two forces?
We continue to invest in technologies that make it easier for clients to do business with us. We have significantly evolved Merrill Lynch One, our fee-based advisory platform. Simplifying the firm’s managed solutions programs into a single platform and navigation site has created tremendous efficiencies and a greater ability for advisors and clients to design and manage customized, goals-based investment solutions.
We have also focused on driving advisor productivity and creating additional capacity for our advisors to focus on growth and deepening client relationships. For example, we have invested in systems and processes to more efficiently gather client information, monitor portfolios and prepare for client reviews. We have already saved each advisor over two weeks of time in 2018, with more time saves expected in the coming months. Paired with a redesigned compensation program, we have seen household acquisition per advisor almost double.
What are the traditional client services that large wealth management firms have to reinvent to keep them relevant? Are there any services that need to be dropped entirely?
Traditionally, most wealth management processes have been heavily reliant on manual, paper-based systems and client servicing solutions. Digitizing those processes serves two equally important purposes. First, it helps meet client expectations which have increased dramatically in a relatively short period of time, with points of comparison extending far beyond large financial institutions. They have become accustomed to — and expect — all companies to have simple, streamlined servicing and fulfillment solutions. Second, enabling self-service of simple tasks while removing back-end processing achieves a strategic goal of driving down costs.
We have been particularly focused on enhancing our digital platforms. In our mobile app, clients can now view and download statements, scan and send documents to their advisors, set paperless settings, customize push alerts and view their account performance. While mobile receives the most attention within the industry, clients still use our online platform at a higher rate, and we continue to invest accordingly. This includes enhancing navigation and client usability, modernization of the experience, expanding the number of forms eligible for e-Signature and providing personal financial management capabilities like spending, budgeting and cash flow tools.
A number of executives have shared their perspective on big tech’s (re: Amazon, Google) intent toward wealth management. What’s yours?
Again, we are strongly positioned to compete, both with new entrants focused on niche services and large, established technology firms. We are forward-looking and focused on delivering innovative solutions and experiences to our clients while taking advantage of the benefits inherent within the combined Bank of America Merrill Lynch enterprise.
How does growth continue for wealth management firms with a branch-based model? How does that strategy square with surveys that suggest the client is moving away from branch experiences to all digital and all mobile?
We believe in a “high tech / high touch” strategy because clients want to access financial services both digitally and physically. Across Bank of America, 25 million customers use our app every day and 1 million customers visit our branches. Earlier this year, we announced that we’ll open 500 new financial centers and expand our Merrill Edge platform to 600 new investment centers. Our goal is to provide clients with financial services as and when they want.
