Merrill Lynch finds that, historically, clients may have used alternative investments more opportunistically around a specific theme.
Now, according to Keith Glenfield, head of alternatives at Bank of America, Merrill sees a more deliberate approach to core allocations coming from clients. Glenfield discusses the wirehouses efforts to make it easier for advisors and clients to incorporate alternatives more consistently, and closer to research-recommended levels.
How is Merrills platform structured to best serve your advisors and their clients?
Our platform is designed to provide our advisors and clients with a range of high-quality investment solutions tailored to their financial needs. Advisors can address client goals by implementing portfolios that incorporate some level of alternative-investment exposure to help deliver the desired outcome. For example, some alternative investments offer income, while others offer diversification and protection from traditional equity markets.
How do you train your advisors about the use of alternatives?
Advisor and client education is critical. Conversations with clients should always start with an understanding of the clients situation, what theyre trying to achieve and how we can develop portfolios to help them pursue their goals.
Specific to alternatives, we have a series of foundational and targeted training programs available (in person and online) to advisors to ensure an understanding of alternatives role within a portfolio, evaluating client suitability and ensuring a full understanding of the risks. Our advisors are required to participate in a course before offering certain AI solutions to clients, as well as ongoing updates. This is all in addition to our core training for use of alternative investments.
What do you say to advisors who shun alternatives?
It is important to understand why and listen as a starting point. Based on my experience, there could be several potential reasons, including poor prior experience and simply not knowing how to best get started and engage clients around a complex topic. Once you identify the primary reasons for limited use, it is much easier to take a step back and evaluate potential ways to address concerns.
More broadly, alternative investments make up around 11% of global assets, and are projected to grow faster than traditional investments, according to industry analysis.
What are the biggest challenges your advisors face involving alternatives?
A key challenge is time and how to seamlessly incorporate AI into their existing investment strategy. It is important for advisors to meet with their clients on a regular basis to discuss progress toward goals.
Our ability to provide advisors and clients with simple, timely and actionable information regarding their investments is a key decision point when determining the level of allocation to AI. Also, while progress is being made, there are still gaps in how easy it is to incorporate AI. Technology is helping for sure with more online, consistent and timely access to information. We expect the industry to make a lot of progress here in the coming years.
There is a relatively new alternative fund category known variously as multi-alternatives, multi-strategy and multi-manager. How has Merrill Lynch approached this category?
Generally, multi-strategy type offerings are an attractive starting point when building a portfolio since they can provide clients with a more diversified set of exposures in an efficient manner, managed by a third-party asset manager.
It is common for portfolios to include some type of diversified solution as a core offering and then include additional targeted investments for specific purposes for example, private equity investments in health care or real estate. We provide clients with access to portfolio models that benefit from our due diligence process, but individual building blocks are combined to develop portfolios aligned with target objectives (liquidity, risk, return). These portfolios are available for all clients so we have models with only mutual funds, or combining private equity, hedge funds, real estate and mutual funds.
- Merrill Wins $1.3M Clawback From Ameriprise Advisor
- $550M+ Merrill Advisors Go Indy
- Merrill Grabs $3M UBS Team