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BoA Plays to Merrill Strength in Ads Aimed at Near-Retirees

Bank of America plans to spend $15 million to $20 million on a new advertising campaign targeting retirees. The four-month "help2retire" campaign, which launched this month, will include national print and television advertising as well as billboards and online ads.

BoA said the campaign encourages individuals to work with a Merrill Lynch adviser to find areas of their lives that they would like help in "retiring," such as confusion around Roth individual retirement account conversions.

Analysts said BoA is trying to create more synergy with Merrill Lynch and its corps of financial advisers, and in so doing, increase assets.

"There was the obvious cross-selling opportunity that everyone realized when BoA bought Merrill, but beneath that, there are a lot of opportunities for BoA and Merrill to co-venture," said Geoffrey Bobroff, president of Bobroff Consulting in East Greenwich, R.I.

Andy Sieg, the head of retirement and philanthropic services for Bank of America Merrill Lynch, said that "from the context of the legacy companies, this type of marketing and advertising effort behind retirement is unprecedented." Sieg expects the campaign will help BoA "rapidly" increase its retirement assets under management this year.

Adding retirement assets has been a key goal at the $2.39 trillion-asset BoA since it hired Sallie Krawcheck in August as head of wealth management and brokerage operations.

In October it rolled out My Retirement Income, a group of products that let customers nearing or in retirement automatically transfer funds from a Merrill Lynch cash management account into a BoA deposit account monthly or quarterly.

Krawcheck hired Sieg from Citigroup to lead the retirement initiative. The company had $450 billion of retirement assets under management at the end of last year and is looking for ways to cross-sell Merrill Lynch's products and services to BoA's corporate and middle-market customers. Sieg said the marketing campaign complements the cross-selling program.

Major Marketing Muscle

"We are really putting our marketing muscle behind the retirement opportunity," he said. "If you think strategically, the retirement marketplace is one of the largest opportunities for our company."

According to the Charlotte banking company's research, $330 billion of retirement assets are eligible to be rolled over this year, and 13 million households are eligible for Roth IRA conversions.

Bank of America, of course, isn't alone in going after the retiree market. Other large financial services companies, including Prudential, have centered advertising and marketing campaigns on retirement assets.

"In the wealth management space," however, "client acquisition is traditionally driven by referrals, not by advertising," Sieg said. "Therefore, this is a very different approach."

Justine Metz, the head of marketing for retirement and philanthropic services at Bank of America Merrill Lynch, said BoA spent "quite of bit" of its advertising budget on retirement in 2008, but "we didn't achieve as much as we wanted to" in those efforts. "The bank didn't have an investment on the advice side unto itself, and Merrill Lynch didn't emphasize retirement at all in its marketing or advertising campaigns," Metz said.

"They never did an explicit campaign around retirement. They focused their advertising on advice and the thundering herd." BoA plans to lead the campaign with Merrill Lynch's adviser force because, Metz said, the "financial advisers are a major differentiator. This campaign is all about personalization," she added.

BoA on a Roll with 401(k)s

Bank of America expects "significant" growth in 401(k) assets this year after its 401(k) assets increased 15.6% in 2009 to $81.5 billion from a year earlier. Kevin Crain, the head of institutional client relationships for Bank of America Merrill Lynch, said the company is projecting significant growth in new clients and new assets this year.

But analysts say it could be difficult to generate additional 401(k) business because employers are reticent to change providers. "Right now, employers are focused on running their business and don't want to take the time to switch 401(k) administrators," said Geoffrey Bobroff, president of Bobroff Consulting in East Greenwich, R.I. "This is a good initiative for Bank of America, but meaningful growth is a question mark."

Bank of America Merrill Lynch had a meaningful increase in retirement "saving trends" last year, Crain said. According to the company, 80% of BoA's 1.5 million 401(k) participants who changed their savings rate in the fourth quarter chose to increase savings, compared to 64% in the previous quarter.

More than 402,000 employees took a "positive savings action," by starting or increasing savings in their 401(k) during the fourth quarter. During the first nine months of last year, 318,884 employees took a positive savings action.

Crain said that BoA had an increase in 401(k) assets last year because of an increased use of automatic enrollment and more employers tying 401(k) enrollment to healthcare enrollment.