According to a recent report by Bloomberg, the Bank of America/Merrill Lynch (BoA) retirement division had a record year in 2012, led by the sale of 401(k) plans. The $24.3 billion in new sales of DB and DC last year represents a 28% increase over 2011, with 96% of the sales from 401(k)s measured by number of plans. Sales to existing bank clients more than doubled, from $5 billion to $10.6 billion.
BoA has a proprietary product for DC plans over $10 million, while the Merrill Lynch financial advisors sell other record keepers’ products in the smaller market. The bank also has a relationship with Pai for micro market plans.
Before the acquisition of Merrill Lynch in 2009, BoA had been trying to buy a record keeper, and was rumored to be active in the CitiStreet sale that eventually went to ING. With the Merrill Lynch purchase, BoA not only acquired a record keeper that’s currently ranked 12th in the 401(k) market and has almost $100 billion in assets under management, it also acquired arguably the industry’s most powerful distribution network. Other national banks in the DC and retirement market include JP Morgan and Wells Fargo, with regional firms like BB&T and PNC also serving this market.
Banks have a natural advantage selling other services like retirement plans to their current client base, and they have experience dealing with and marketing to consumers. Very few if any have had much success cross selling, but based on their 2012 results, BoA seems to have cracked the code.
