Merrill Lynch has reclassified a group of novice advisors to resemble their more veteran counterparts by permitting them to charge up to its maximum advisory fee and offer similar investment products and services to clients, according to a Form ADV brochure for its investment advisory program.
The newly designated group includes trainees who, based on a 2021 retooling of Merrill broker training, had the title of Merrill Financial Solutions Advisors. They were in a part of the firm’s training program that required them to serve 18 months in a brokerage branch before they became eligible to assume full-fledged Merrill broker roles.
The MFSA designation has been discontinued, and they now have the title “Financial Advisor,” according to the ADV update.
“If you work with an MFSA, they are no longer subject to limitations on the investment services they can provide … and [they] are able to negotiate a Merrill Lynch Fee Rate up to the maximum rate of 1.75% for Program Services, like other Advisors,” the wirehouse told clients in its brochure filed with regulators on June 26.
A person close to the firm explained that Merrill is “streamlining” its advisor development program, which has around 2,400 trainees, “to make the career path easier to understand and provide advisors with broader capabilities from the start.”
Those former MFSAs will still be paid on a salary and bonus plan rather than the production-based grid of their more experienced counterparts.
Merrill’s description of the change seemed aimed to assuage clients’ potential concerns about fee increases. The firm stated that the change didn’t necessarily mean clients’ fees would rise: “Please note that this change of designation does not in and of itself affect the Merrill Lynch Fee Rate applicable to your Account.”
For Merrill veteran advisors, the policy change means equal-footing status for some Merrill trainees—at least in terms of the products and services they can offer clients and the fees they can charge them.
The former MFSAs will not be eligible, however, to offer certain investment products and strategies that would also require advisors to earn specific qualifications, according to the filing. It did not provide additional details.
There has been no change to the status of Merrill’s parent Bank of America branch-based Financial Solutions Advisors as well as MerrillEdge call center based FSAs, which is how most clients interact with salaried advisors, according to the same source close to the company.
A Merrill spokesperson declined to specify the maximum fee that MFSAs could charge prior to the change.
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