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Merrill Lynch Aims to Expand 3(21) Fiduciary Services

The firm currently offers 3(21) service in some instances, but the approach will be significantly expanded with this business change.

By John Manganaro editors@assetinternational.com | March 15, 2017

Merrill Lynch has released new information about its “broadening fiduciary service strategies,” following a previous announcement that clarified how the firm will treat commission-based individual retirement account (IRA) business.

The firm leadership tells PLANADVISER many of its 14,000 advisers on the ground want to be able to utilize deeper fiduciary service capabilities for the institutional retirement business. “This means our advisers will offer ERISA 3(21) fiduciary service when providing retirement investment menu advice or recommendations,” the firm says. “We have been strategically designing our business offerings in this direction for some time.”

The newest announcement comes just after the Department of Labor (DOL) published a Field Assistance Bulletin regarding the fiduciary rule delay. That document establishes that DOL does not intend to enforce the fiduciary rule slated for implementation April 10, even if it fails to formally overturn the rulemaking by then. Still, Merrill Lynch and many other firms clearly see an opportunity in expanding their fiduciary offerings, given the strong organic client demand that exists for such service.

In terms of specific implementation strategies, the firm is “modifying some offerings and creating an infrastructure that will enable Merrill Lynch financial advisers to offer fiduciary services.” This will involve “building on our experience in advice and guidance with a Merrill Lynch delivered 3(21) fiduciary service; continuing to expand and enhance an already rigorous designation and training program, building on our team of advisers uniquely qualified to help meet our clients’ plan needs and goals; and providing objective investment advice and menu services backed by the Chief Investment Office, with no proprietary investment conflicts.”

As part of this effort, the firm will be unveiling new “simple and easy to understand pricing for clients, delineating the services provided by Bank of America Merrill Lynch and its financial advisers.”  The firm also plans to “deliver a consistent Institutional Client Experience Standard that includes robust, clear documentation, ongoing monitoring, periodic reviews and client feedback; and to offer holistic financial wellness capabilities, bringing the resources of the Bank of America enterprise to bear to help people live their best financial lives.”

The firm suggests its advisers will soon be coming to the marketplace with updated information and offerings.