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Rating:Big Broker to Push Funds Onto 401(k) Platforms Not Rated 5.0 Email Routing List Email & Route  Print Print
Friday, May 09, 2003

Big Broker to Push Funds Onto 401(k) Platforms

Reported by Ki Kim

Merrill Lynch is extending placement and distribution of its key funds with a launch of R-class shares this coming July.

The roll-out will cover 26 Merrill Lynch Investments mutual funds representing all major asset classes, Diane Talbot, director, Product Management & Marketing at Merrill Lynch told the MFWire.com. The pending Merrill R-shares were created in January and they are intended to significantly open placement of the Merrill fund to broker-sold plans, she added.

The wirehouse plans to sell the new shares through its own sales force of some 14,000 financial conultants, outside brokers and via its MLConnect recordkeeping partners, confirmed Talbot. Merrill officials expect that most of the broker-sold plans will fall in the under-$10 million range in terms of assets, which Merrill considers the smaller-plan market.

As for the payout schedule, the Merrill R-shares will carry a 50 basis point 12b-1 fee, while the recordkeeping, or sub-TA, fee will be negotiated on a deal-by-deal basis, according to Talbot.

Meanwhile, Mark Davis, an industry consultant, sees the move by Merrill as further confirmation of the trend toward level compensation and away from transaction-based pricing, which tends to tempt some brokers to keep moving funds to reap front-end sales loads. 

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