BoA Planning Retirement Plan Managed Account Service for 1Q21

Bank of America has submitted a filing with the Securities and Exchange Commission (SEC) to offer Personal Retirement Strategy, an online advisory program available to participants of plans that use Bank of America as their recordkeeper and Merrill Managed, its managed account service, as their qualified default investment alternative (QDIA). Bank of America expects to bring this to market in March 2021.

“This is the first time we are making our managed account service and a retirement planning solution from our chief investment office accessible to retirement plans,” says Tom Matarazzo, head of institutional retirement advisory programs and financial wellness solutions at Bank of America. “Prior to this, we offered Advice Access, which leveraged Morningstar’s advice and guidance. This new program, which took two years to develop, is part of our Financial Life Benefits strategy and the journey we have been on in giving participants intuitive help to achieve their retirement goals. It will use Merrill’s goals-based retirement planning to give individuals personalized retirement planning advice.”

Merrill will act as a discretionary investment manager under Section 3(38) of the Employee Retirement Income Security Act (ERISA). Thus, under the program, Merrill is a fiduciary to the participant.

Personal Retirement Strategy will use data received from the plan sponsor and from participants, if provided. Data will include, but is not limited to, the participant’s account balance and contribution rate, salary, savings outside of the plan, retirement age and desired retirement income. Participants can input data about themselves at the interactive website www.benefits.ml.com.

The program provides investment advice and guidance through goal funding status analysis, retirement income planning, retirement tax illustration and asset allocation recommendations. Merrill will also provide participants information about the steps they can take to improve their goal funding status. The goal is to replace 85% of each individual’s projected salary at retirement throughout their years of retirement. If participants are not satisfied with that metric, they can customize the annual retirement income goal to either a different percentage or a target dollar amount.

Merrill Managed uses goals-based asset allocation to select the most efficient asset allocation to invest each individual’s plan assets with a 75% probability of achieving their goal funding status. This approach is designed for an investor with a medium risk tolerance.

Merrill will re-examine each managed account’s investments every 90 days, and will reallocate and rebalance assets as appropriate to help each individual meet their annual retirement income goal.

Matarazzo notes that the program is designed for every stage of a person’s working life, even to take them through retirement, and, as such, it will offer retirement income solutions and a suggested withdrawal hierarchy for those who are retired.

Participants can restrict or limit the sale of certain securities or holdings within their plan.

The Merrill Managed fee is 0.25% of the assets, which can be negotiated with plan sponsors, Matarazzo says. There is no additional charge to participants or the plan sponsor. Matarazzo says this is a competitive price, as most managed accounts charge 40 to 65 basis points (bps). “There is no fee for the planning, which I think is a key differentiator,” he says.