Merrill Guided Investing: Technology driven convenience — with human insight and expertise

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Active oversight, monitoring — and adjustment — by experienced investment professionals provide an edge for investors seeking more than just an algorithm to help them invest.

Key points

  • Unlike "robo advisors," which make purely computer-driven investment choices, Merrill Guided Investing combines the power of technology with the insights and expertise from the Chief Investment Office (CIO) team for Merrill and Bank of America Private Bank who manage the accounts' investment strategies to seek potentially better returns.
  • Experts in asset allocation, securities selection and portfolio construction, the CIO team brings their collective industry experience to managing the firm's investment strategies, including those available through Merrill Guided Investing.
  • The CIO team regularly assesses the market and using a disciplined approach, adjusts the strategies as needed, seeking to capitalize on market trends.
Over the past decade, so-called "robo-advisors" have quietly become a growing part of the investment landscape. For many investors, online-only portfolio management services offer a combination of convenience, low cost and access to a wide array of investment choices. A robo-advisor can also help investors overcome some natural uncertainties or confusion about how to get started by offering a clear selection of investing strategies based on information provided by the investor. But should online-only mean algorithm-only?

The value of human insight

Despite the advantages that automation provides, online investing services that rely exclusively on algorithms may miss the benefits of human analysis and experience. "We believe it's the human part of the equation that can make the difference," says Joe Curtin, head of Global Portfolio Solutions, Chief Investment Office, Merrill and Bank of America Private Bank.
That's especially true when it comes to building and managing investment portfolios that reflect a deep understanding of ever-changing economic and market conditions, Curtin believes. "You need the resources and capabilities to understand geopolitics, as well as macro, central bank and tax policies, and how all of them come together to affect global markets," he says. "A 'robo-advisor' program relying solely on algorithms is inherently limited in terms of the information it can process and the output it can deliver."
Merrill Guided Investing takes a different approach, seeking to combine the best that automation and people, working together, can offer. While the technology behind Merrill Guided Investing helps an investor find an investment strategy that's aligned to his or her goal, risk tolerance and time horizon, seasoned professionals draw on years of investment experience to actively manage that strategy for the investor.
We evaluate the contribution that each investment makes, with the goal of delivering the best potential returns for a given level of risk in a variety of market situations.
— Joe Curtin, head of Global Portfolio Solutions,
Chief Investment Office, Merrill and
Bank of America Private Bank
"The investment management approach for Merrill Guided Investing is consistent with how we manage portfolios for other Merrill offerings," Curtin says. "We monitor and forecast market cycles, economic changes and what's happening in the U.S. and around the world. We evaluate the contribution that each investment makes, with the goal of delivering the best potential returns for a given level of risk in a variety of market situations."

Helping investors stay on course

Knowing that experienced investment professionals are weighing these factors could help investors avoid some missteps that can derail an investing strategy, such as the tendency to make rash decisions on buying or selling when markets become volatile. "With skilled experts assessing and managing risks and opportunities, you can step back during times of volatility and stay focused on your long-term goals, such as staying on track towards retirement," Curtin says.
A portfolio constructed by professionals can help investors avoid falling into other traps, such as becoming over-confident or under-confident about investing (making too many choices, or too few). "Professional managers use a disciplined approach that helps them more objectively assess their level of confidence in their choices," Curtin adds.

The people behind Merrill Guided Investing

So, who provides this extra measure of expertise for Merrill Guided Investing strategies? That falls on the strategy construction and investment selection specialists from the Chief Investment Office, Curtin says.
With skilled experts assessing and managing risks and opportunities, you can step back during times of volatility and stay focused on your long-term goals.
— Joe Curtin, head of Global Portfolio Solutions,
Chief Investment Office, Merrill and
Bank of America Private Bank
The work they do falls into three main categories:
  1. Strategic asset allocation models
    A team of CIO experts develops the longer-term strategic asset allocation models that the firm uses as the starting point for investment decisions. They do this by applying:
    • Modern portfolio theory, emphasizing diversification for investment portfolios that seek to maximize returns at a given level of risk
    • Long-term capital market assumptions about risk and return, based on Merrill's analysis and investment insight
    • Forecasts and insights about future market trends
    • Thousands of data points charting the history of stock and bond performance
    • The resulting strategic asset allocation models are revisited annually and updated (or rebalanced) as assumptions about long-term trends change.
  2. Tactical asset allocation adjustments
    Portfolio managers from the CIO Portfolio Management group meet regularly to assess emerging risks and opportunities in the current market and apply them to the asset allocation strategies.

    The team includes economists and market strategists who meet with market participants and industry leaders to determine the firm's macro views. They recommend tactical adjustments to the strategic asset allocation models.
  3. A rigorous investment selection process
    A CIO "due diligence" team analyzes thousands of exchange-traded funds (ETFs) and mutual funds to identify those that qualify to fulfill the asset allocation strategies. The ETFs and mutual funds they select have undergone a disciplined, structured review process that evaluates each fund's management team, performance history, consistency, liquidity, expenses and ability to fulfill a specific asset class need.

    "Our goal is to identify ETFs and mutual funds that represent our view of financial markets. We are looking for ETFs and mutual funds that have more potential for positive returns, which is particularly important in the current market cycle," says Curtin.
Beyond the experience that goes into building and managing the asset allocation strategies and investment choices, human insight can also be an important benefit for those seeking personal advice about the best ways to invest towards their goals. For that reason, Merrill offers two low-cost options for its automated investing solution:
  • Merrill Guided Investing: This investment advisory program combines the best features of online investing with a professionally managed portfolio.
  • Merrill Guided Investing with an advisor: This program offers the benefits of Merrill Guided Investing and an expanded selection of investment strategies, along with an advisor who'll work with you to discuss your priorities, coach you as you refine your financial goals, provide personalized advice and guidance and meet with you periodically to review your portfolio and help you stay on track.
"With the launch of Merrill Guided Investing with an advisor, the client now has another choice — to switch to a program that offers an extra layer of human engagement. This ability is absolutely essential in today's world where change is as constant as it is unpredictable," Curtin says. "Yes, we're digital. We're online. But there's very little that's 'robo' about us."
Next steps

Strategic asset allocations are hypothetical and are not intended to indicate specific investment recommendations or advice. Asset allocation cannot eliminate the risk of fluctuating prices and uncertain returns and involves substantial risk, and should not constitute a complete investment program.

Diversification, asset allocation and rebalancing do not ensure a profit or protect against loss in declining markets.

Please review the applicable Merrill Guided Investing Program Brochure (PDF) or Merrill Guided Investing with Advisor Program Brochure (PDF) for information including pricing, rebalancing, and the details of the investment advisory program. Your recommended investment strategy will be based solely on the information you provide to us for this specific investment goal and is separate from any other advisory program offered with us. If there are multiple owners on this account, the information you provide should reflect the views and circumstances of all owners on the account. If you are the custodian of this account for the benefit of another person, please keep in mind that these assets will be invested for the benefit of the other person. Merrill Guided Investing is offered with and without an advisor.

Merrill investment advisory programs are offered by Merrill Lynch, Pierce, Fenner and Smith Incorporated ("MLPF&S"). MLPF&S and Managed Account Advisors LLC ("MAA") are registered investment advisors. Investment advisor registration does not imply a certain level of skill or training.
The Chief Investment Office (CIO) develops the investment strategies for Merrill Guided Investing and Merrill Guided Investing with Advisor, including providing its recommendations of ETFs, mutual funds and related asset allocations. Managed Account Advisors LLC (MAA), Merrill's affiliate, is the overlay portfolio manager responsible for implementing the Merrill Guided Investing strategies for client accounts, including facilitating the purchase & sale of ETFs and mutual funds in client accounts and updating account asset allocations when the CIO's recommendations change while also implementing any applicable individual client or firm restriction(s).

Bank of America, N.A, U.S Trust Company of Delaware, Merrill Lynch Life Agency Inc. and MLPF&S, a registered broker-dealer and Member Securities Investor Protection Corporation (SIPC), are wholly owned subsidiaries of Bank of America Corporation ("BofA Corp."). MLPF&S and Managed Account Advisors LLC (MAA) are registered investment advisers. Investment adviser registration does not imply a certain level of skill or training.

Trust and fiduciary services are provided by Bank of America, N.A., Member FDIC, or U.S. Trust Company of Delaware. Both are wholly-owned subsidiaries of BofA Corp.

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