Bank of America Corporation

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Merrill Edge Mulls Subscription Pricing

Photograph by Sergey Zolkin

Another financial-services heavyweight might follow in Charles Schwab ’s footsteps in charging for financial advice on a subscription basis.

Bank of America ’s Merrill Edge business is considering subscription pricing, On Wall Street reports, citing comments this week by Teron Douglas, head of digital capabilities at Merrill Edge .

“Clients are simply getting used to paying to subscriptions. It’s a logical next step. It’s just a question of getting the pricing right,” Douglas said at a conference, in response to an audience member’s question.

Charging subscriptions for advice differs from the more common approach of billing for investment management based on AUM.

It’s unclear which Merrill Edge services might see such a pricing change or whether the unit is considering adding a new subscription offering to its existing lineup. A Merrill spokesperson did not reply immediately to a request for clarification.

Last month, Merrill launched “Merrill Guided Investing with an Advisor,” which combines digital investment management with advice from human advisors. It also offers a standalone robo-advisor and an online brokerage for do-it-yourself investors.

In late March, Schwab started charging on a subscription basis for its hybrid robo service, which combines automated investment management with unlimited access to human financial planners. Since then, Schwab’s service has brought in $1 billion in new assets.

Schwab’s move generated a lot of industry discussion about the merits of subscription pricing.

Last week, Raymond James CEO Paul Reilly said he doesn’t see “any sudden movement into it” but that his firm is “not closed to it,” Financial Advisor IQ reports.

“I think for millennials or young people … it’s probably a good model today,” Reilly said. “I think for the people with any kind of worth, net worth I don’t think it would be a high take-up today. But that could change over time.”

--Ross Snel


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