Use of the advice service that Bank of America Merrill Lynch Retirement & Benefit Plan Services offers 401(k) plan sponsors for free increased 23% year-to-date since September 2009.

Some 390 of the 1,500 plans the firm administers now offer plan participants access to an advisor to help them with their investment decisions.

BofA Merrill, which now administers $86 billion in assets for 1.4 million plan participants, started offering Advice Access seven years ago. Using the service, plan participants can talk to a licensed retirement specialist at a call center or an advisor making an onsite visit about their portfolio allocations using an Ibbotson planning tool uniform to its 401(k) plans.

BofA Merrill doesn’t charge plan sponsors for the service (although it had considered doing so) because the firm benefits from the higher participation and savings rates by plan participants who have spoken to an advisor, said Kevin Crane, managing director and head of institutional client relationships at BofA Merrill in Hopewell, N.J.

“We felt customers needed the help and usage has grown appreciably,” he said. “And financial advisors like it because it offers them a nice way to work with a company by offering employee training sessions.”

Advice Access also makes it easier for advisors to work more closely with individual plan participants via personalized prospectus statements, which advisors discuss one on one with a client company’s employees once their plan goes live. In turn, those advisors “earn the right and respect to extend the relationship,” should a plan participant have outside assets to invest.

While offering advisor services helps boost participation and the service is free for plan sponsors, client participation is a work in progress. Crane says that 25 out of the 30 largest plan sponsors—companies in the $100 million to $1 billion range—are live with the advice component, adoption among companies of $5 million to $100 million is languishing in the high teens to low twenties in terms of percent.

Crane said that low take up is primarily due to inertia—large companies have teams of people in their human resources departments, whereas smaller companies might have just one or two HR managers who are pulled in so many directions they don’t have all their bases covered.

From a fiduciary standpoint, though, providing access to advisors is the right thing to do. To prove it, Crane developed a five-point scale that aims to measure more than whether or not plan participation increased, since many companies now employing auto-enrollment experience the same thing.

Instead, Crane also measured other bellwethers, such as whether employees are maximizing their employer match, whether their portfolios are properly diversified, whether they’re taking money out and whether employees use advice services when they’re available. The result is a 10-point scale where points are deducted for undesirable behaviors and anything over seven points is healthy. 

BofA Merrill found that while employees who use its advice service achieved 8.3 points out of 10 in terms of their financial health, those who didn’t have access to advice measured only 6.5 out of 10. “That’s a very strong statement to us,” Crane says.

What’s more, employees who received advice are stickier plan participants. Crane said that despite the market volatility over the past two years, 99% of employees who got help from a financial advisor are still investing in their companies’ 401(k) plans.