Pricing Analysis for Merrill Lynch Integrated Choice

In late 1998, Merrill Lynch and other full-service financial service firms were under assault. Electronic trading and the commoditization of trading threatened Merrill Lynch's value proposition—to provide advice and guidance through a financial advisor. Management decided to offer investors more choices for doing business with Merrill Lynch. A cross-functional team evaluated alternative product and service structures and pricing and constructed models to assess individual client's behavior. The models showed that revenue at risk to Merrill Lynch ranged from $200 million to $1 billion. The resulting Integrated Choice strategy enabled Merrill Lynch to seize the marketplace initiative, changed the financial services landscape, and mitigated the revenue risk. As of year-end 2000, client assets reached $83 billion in the new offer, net new assets to the firm totaled $22 billion, and incremental revenue reached $80 million.