Merrill Makes a Play for Younger, Less Affluent Clients

Summary

---

WSJ Your Money Briefing

Episode Summary: Merrill Makes a Play for Younger, Less Affluent Clients

Date: April 9, 2019
Host: J.R. Whalen
Guest: Rachel Louise Ensign (Wall Street Journal Reporter)

---

Episode Overview

In this episode, “Merrill Makes a Play for Younger, Less Affluent Clients,” WSJ reporter Rachel Louise Ensign joins host J.R. Whalen to discuss how Merrill Lynch, with help from its parent company Bank of America, is shifting strategy to appeal to younger and less affluent clients. The conversation explores the changing landscape of wealth management, the rise of robo-advisors, and the broader push by big banks to capture future wealth transfers from younger generations.

---

Key Discussion Points & Insights

1. The Need to Attract Younger Clients

• Traditional wealth management historically focused on older, wealthier clients.
• Merrill Lynch is changing tack to avoid missing out on future high-net-worth individuals among the millennial and younger generations.
• Millennials stand to inherit roughly $30 trillion over the next 20 years.
  • [02:46] "Millennials and the younger generation are in line to inherit roughly $30 trillion over the next 20 years." — J.R. Whalen

2. Merrill's New Strategy

• Bank of America will place 300 employees in Merrill Lynch wealth management offices.
• The goal is to help younger, less affluent investors access digital products and services.
  • [02:58] “Bank of America is going to be putting 300 employees inside the traditional Merrill Lynch wealth management offices whose job is to sort of help younger, less affluent investors get into digital products.” — Rachel Louise Ensign

3. The Influence of Robo-Advisors

• Robo-advisory firms set the trend of targeting clients with fewer assets via digital tools.
• Traditional players now fear losing out when these clients eventually accumulate more wealth.
  • [03:31] “These robo advisors who have these digital investing tools for people have really cornered the market on folks with say below $250,000 in assets. And the traditional players are starting to worry that when those people make enough money for typical wealth products, they won’t be customers anymore.” — Rachel Louise Ensign

4. The Big Picture: Wealth Transfer and Industry Competition

• Major wealth transfer expected—banks hope to build relationships now to keep future high-net-worth clients.
• Other big banks and discount brokerages (like Schwab and TD Ameritrade) have also aggressively pursued this market.
  • [04:40] “Among the big banks, big banks with wealth businesses have developed these robo advisors, and so have the so called discount brokerages. Those are the Schwab’s and the TD Ameritrades of the world. They’ve been doing stuff like this for a long time. And this is Bank of America’s effort to take a little bite out of their business.” — Rachel Louise Ensign

5. Investment in Future Clientele

• This initiative represents a long-term investment to ensure the next generation of wealthy clients stay within the Merrill Lynch ecosystem.
  • [05:00] “All right, an investment in the future for Merrill Lynch and the other banks.” — J.R. Whalen

---

Notable Quotes & Memorable Moments

• “The goal here is to make it so that these offices aren’t just serving older, really wealthy clients. They also have some services for younger people with fewer assets.”
  [02:58] — Rachel Louise Ensign

• “When that wealth transfer that you mentioned happens, which is predicted to be trillions of dollars, you want those people to already be Merrill Lynch customers, even if they don’t have that much money before that.”
  [04:17] — Rachel Louise Ensign

---

Timestamps for Important Segments

• [02:46] — Discussion of millennials’ upcoming wealth transfer
• [02:58] — Merrill Lynch’s new hiring strategy for younger clients
• [03:31] — The challenge posed by robo-advisors
• [04:17] — Importance of having relationships before wealth transfer
• [04:40] — Industry-wide competition and context

---

Tone & Language

• The conversation is informative, straightforward, and geared toward a general audience, keeping the focus on evolving strategies in the wealth management industry.
• Rachel Louise Ensign’s tone is analytical and concise, breaking down trends and industry moves with clarity.

---

This episode is essential listening for anyone curious about how major banks are evolving to meet the needs of new generations—and what it means for the future of wealth management.

Transcript

[A]

This podcast is brought to you by relioQuest. Cybercriminals are constantly attacking. They want your data. They want your identity. They want your innovation. RelioQuest fortifies your business with agentic defense AI that detects, contains and eliminates cyber threats in minutes. It helps your security team move faster at the work that matters most to protect the business now and delivers insights to help them predict what's next. ReliaQuest agentic defense for the enterprise. Learn more at reliaquest.com that's R E L I A Q U E-S-T.com.

[B]

Here's your Money briefing. I'm J.R. whalen at the Wall Street Journal in New York. It's not just the robo advisors going after millennials and younger people hoping to line up their banking business. The big banks are in on the action, too. We've got details coming up. First, these money and market stories you should know the newest Wall Street Journal NBC News poll indicates the new tax law hasn't made much of a difference in whether people think they're winning or losing in doing their taxes. Just 17% of those polled said they are paying less in taxes under the new law, while 28% said they're paying more. The rest say they don't know or that their taxes have barely changed. And those numbers are in line with last year's poll. The data so far this year shows that 48% of households are getting a tax cut greater than $500 compared with what they would have paid under the old tax law. Just 5.5% of households face tax increases greater than $100. And here's a dose of good news for the major US Airlines and passengers. Their performance scores are the best in about 30 years. Now, by that, we mean consumer complaints on time performance and things like mishandled baggage. The airline quality rating takes in several factors across all major US Airlines, and Delta topped the list on time, performance edged up, its mishandled baggage rate was essentially the same and consumer complaints dropped. That's according to the study. And among the nine major airlines in the U.S. consumer complaints with the Transportation Department were down 23% in 2018 compared to a year earlier. Baggage mishandling was also down, as was involuntary denied boardings. That's a technical term for being bumped. But what was also down on time arrivals. They edged from 80.2% down to 79.6%. Millennials and the younger generation are in line to inherit roughly $30 trillion over the next 20 years. And while their current financial holdings might not make them candidates for wealth management advisors. Banks like Merrill lynch want to develop relationships with them now. And Rachel, Louise Ensign, our Wall Street Journal reporter, is here with some details. So, Rachel, this involves Merrill lynch getting some help from its parent, bank of America to reach this younger generation.

[C]

So what we've reported on Monday is that bank of America is going to be putting 300 employees inside the traditional Merrill lynch wealth management offices whose job is to sort of help younger, less affluent investors get into digital products. So basically the goal here is to make it so that these offices aren't just serving older, really wealthy clients. They also have some services for younger people with fewer assets.

[B]

This is an area where robo advisory firms have set the pace.

[C]

Yes. So that's basically why we thought this was really interesting, is because it's a nod to the changing world of wealth management. And, you know, for a long time, a financial advisor, a traditional financial advisor was the only game in town. And you might not have enough money to qualify, but when you did, that was really your only choice. And now these robo advisors who have these digital investing tools for people have really cornered the market on folks with say below $250,000 in assets. And the traditional players are starting to worry that when those people make enough money for typical wealth products, they won't be customers anymore.

[B]

Right. So you don't want them to fall off the radar and eventually they will be in need of banking.

[C]

Right, exactly. So the view is when that wealth transfer that you mentioned happens, which is predicted to be trillions of dollars, you want those people to already be Merrill lynch customers, even if they don't have that much money before that.

[B]

And among the big banks, it's not as if Merrill lynch and bank of America are the only big banks doing this. There are other competitors of theirs doing the same thing.

[C]

Yeah. So among the big banks, big banks with wealth businesses have developed these robo advisors and so have the so called discount brokerages. Those are the Schwab's and the TD Ameritrades of the world. They've been doing stuff like this for a long time. And this is bank of America's effort to take a little bite out of their business.

[B]

All right, an investment in the future for Merrill lynch and the other banks. That is Wall Street Journal reporter Rachel Louise Ensign here in our studio. Rachel, thanks for coming on the show.

[C]

Yeah, thanks for having me.

[B]

And that's your money briefing. I'm JR Whalen in New York for the Wall Street Journal.

[A]

This podcast is brought to you by RelioQuest Cybercriminals are constantly attacking. They want your data. They want your identity. They want your innovation. RelioQuest fortifies your business with agentic defense AI that detects, contains, and eliminates cyber threats in minutes. It helps your security team move faster at the work that matters most to protect the business now, and delivers insights to help them predict what's next. ReliaQuest agentic defense for the enterprise learn more at reliaquest.com that's R E L I A Q U E-S-T dot com.