Bank of America’s long-awaited Life Plan tool, first announced in April 2019, rolled out Monday to its 30 million bank customers via its mobile app, offers the kind of goal-based planning Merrill Lynch has already built for its clients.
It is unlikely wealth clients will ever need Life Plan, which also uses the bank's popular AI-enabled Erica virtual assistant, as more than a complement to their advisor relationship. However, the new tool could lead more consumers to adopt Bank of America's Merrill Edge investing platform, or so goes the logic at the firm and as well as that of some industry observers.
“They are ahead of the curve here,” said Aite Group analyst Alois Pirker. “Fintechs like Wealthfront and Personal Capital offer investing with planning tools, but who has that many retail clients on their platform?
“Goldman Sachs and Morgan Stanley have the planning and the investing but lack a retail presence. The big banks like JPMorgan Chase and Wells Fargo have investing and the retail clientele, but neither of them has this type of planning tool,” he said. “Nobody is doing that. Nobody has investing, retail and planning on a mobile app.”
J.D. Power's senior director of wealth and lending, Mike Foy, points out that the potential impact is even greater given the scope of the bank's overall offerings.
"Bank of America’s retail universe is so much larger than Merrill Edge and Guided Investing," which as of June 30 boasted 2.9 million users, he said. "This is going to credentialize the Bank of America organization to introduce its suite of investment tools, starting with Edge, to a much broader retail audience.”
“We want to stretch our offerings across clients and build out our continuum,” said Eve Varner, a consumer digital experience executive at Bank of America, who was brought over from Merrill to tailor its advisory planning approach and translate it for a retail audience. “While there are many next steps, we want to integrate our existing investing tools into this client journey, like Merrill Edge and Merrill Guided Investing.”
The first step in cultivating investors, according to Aite's Pirker, is getting people interested in their finances and teaching them to save their money to meet future goals. Starting a dialogue early on from a wellness perspective, Pirker added, will lead to subsequent stops, and by giving clients value from the outset, Bank of America will avoid product pushes, which consumers tend to resist, and build trust in its brand, leading the end user to migrate naturally to the retail bank's other products, among them Merrill Edge and Guided Investing, the bank's consumer investor platform, when the time is right.
Varner said that while Life Plan launched in pilot last November to 80,000 consumers in Colorado, Minnesota and Nevada, the pandemic interrupted the bank's plans for the pilot to have ended in March for a nationwide rollout. The bank selected those three states for its initial test because associates in those locations had already received training on planning and life priorities.
The intended March nationwide rollout was instead delayed for an additional eight months, which enabled Bank of America's digital team to work out training for introduction of some of the more complex features of Life Plan, which involve coaching by customer service associates, who not only work in call centers but also in retail locations across the country.
Those eight months also enabled Bank of America to better study what clients want most: to budget and start saving, save for retirement, buy a house, save for big purchases and improve their credit. Within the application, once a client identifies her or his goal as, say, for example, retirement saving, LifePlan suggests that she or he contact a specialist, who, depending on the client's financial picture, may share information with the client on investment options, either through Edge or a financial advisor.
