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Rating:More Data, More AUM Covered: Merrill's MF Marketing Support Expands Not Rated 1.0 Email Routing List Email & Route  Print Print
Monday, July 20, 2015

More Data, More AUM Covered: Merrill's MF Marketing Support Expands

Reported by Neil Anderson, Managing Editor

There is a new hire in charge of Merrill Lynch's mutual fund platform, and she's moving quickly to provide more support to fund firms and cover more AUM in the wirehouse's supermarket. Some fund firm executives fear that the added services will also add to the cost of being on the platform, but Sandy Bolton, the wirehouse's new head of investment solutions, hinted in an interview with MFWire that those fears may be overblown, or at least that the situation is more complex than those executives think.

Bolton confirms that Mother Merrill is amping up its "existing mutual fund marketing support arrangements." The expanded program just covers traditional open-end mutual funds, at least for now.

In the past, Bolton tells MFWire, Merrill's fund firm support focused mainly on commission-based business, gave fundsters "full access to the managed solutions group specialist organization to help with their fund distribution," and "did not include detailed sales reporting." Yet fee-based business is on the rise at Merrill, as it is elsewhere. The shift comes alongside the rise of the consolidated Merrill One platform.

"Our mutual fund assets have gone from 34 percent fee-based to 47 percent fee-based just over the past few years," Bolton says. "Gross sales going into fee-based is skyrocketing as well."

Bolton declined to talk about the specifics of how much the support expansion will cost Merrill's fundster allies. Yet with the support now extending to fee-based business, too, the expansion would extend fundsters' marketing support arrangements with Merrill to cover more AUM, at least for those whose funds are being used for fee-based business. And more AUM covered by Merrill's support, one can deduce, translates into the fund firm paying more.

"Most fund companies that work with us understand the focus and investment that we've made in Merrill Lynch One," Bolton says. "We want to be able to build out a service that provides all of the details around the assets within Merrill Lynch One."

Here's what fundsters get as part of the support expansion. First, Bolton says, Merrill will deliver "branch-level sales data on a monthly basis." That data will include the region, office, office number, zip code, gross and net sales, and even that fund's market share of assets (within that branch) by Lipper category. For example, a fundster selling a U.S. small-cap growth equity fund could see that their fund had, say, 12 percent of the U.S. small-cap growth equity assets at one branch, but 50 percent at another branch.

The data will also differentiate between sales in "FA-discretionary" accounts (the "rep as PM" model) and in "firm discretionary" (where the home office is using funds within portfolios, and the reps are using the portfolios), Bolton says, "so that there's a real deep understanding of exactly where those sales are going."

Fundsters will see data pulled from all of Merrill Lynch Wealth Management (the branch network of FAs), Merrill Edge Advisory Center (for clients with accounts under $250,000 who can in and talk to an FA), and Merrill Edge Self-Directed (the wirehouse's online, do-it-yourself platform). Bolton contrasts this data with the market-timing data required through 22c-2, which "really can't be used for marketing or sales purposes and can't be shared with third parties."

Fundsters would get the data directly from Merrill, Bolton says, though Merrill is considering making the data available through third parties, too, "whatever third party [the fund firm is] most comfortable with."

"We're also working to potentially partner with Albridge [which is part of Pershing parent BNY Mellon] to deliver them this data, and other third parties as well," Bolton says.

Looking ahead, Bolton hinted that other investment products like ETFs might be included in the support down the line.

"This is strictly for mutual funds ... We're waiting to hear initial feedback that we get," Bolton says. "We're also exploring all options." 

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