Bank of America Introduces 3(38) Investment Management Offering

In 2017, Bank of America launched Fiduciary Advisory Services (FAS) for Merrill Designated Advisors to offer 3(21) non-discretionary services to plan sponsor clients. Based on the success of the offering and by the request of institutional clients, Bank of America has now announced the introduction of a 3(38) discretionary offering.

Stacy Bucchere, head of defined contribution at Bank of America, says the firm has been getting direct requests from clients. “Overall plan sponsors are looking for ways to be a better fiduciary, especially for plans with $10 million in assets and below; 3(38) service is in demand. Plan sponsors want to gain efficiency in operating their business and delegate responsibility for their retirement plans,” he says.

“The new offering will provide plan sponsor clients a choice in how they want to work with us,” Bucchere adds. “The expanded FAS solutions will provide clients with the choice of two service models based on whether they want to maintain or delegate investment discretion.”

Some retirement industry professionals say plan sponsors have a hard time completely giving up investment decisions. According to Bucchere, with Bank of America’s offering, plan sponsors will still have input. “We will have three menus—core menu, core plus and expanded menu—and depending on the demographics and investment acumen of participants, plan sponsors will have choice. The difference in the choices is the number of asset classes available. They also will have a choice for a stable value or money market fund, as well as target-date or balanced funds,” she explains.

By participating in the FAS program, plan sponsors also benefit from the expertise of the chief investment office, and specifically its due diligence team, which has 62 investment professionals who conduct quantitative and qualitative analysis to evaluate and select investment strategies. Plan sponsors will work with Merrill Designated Advisors specialized in this area and sophisticated reporting.

According to Bucchere, 4,100 Designated Advisors have completed designation requirements and will be able to provide either 3(21) investment adviser or 3(38) investment manager services.

“This will be beneficial to plan participants, as defined contribution plans are increasingly more important [to saving for retirement]. This offering, along with other services, is to help ensure good outcomes for participants in the plans we serve—the core of what we do,” Bucchere says.