Bank of America is acquiring Merrill Lynch for $50 billion. U.S. News asked three financial advisers what this means for Merrill Lynch customers and all 401(k) investors. Excerpts:
Steven Dimitriou, a financial adviser and managing partner at Boston's Mayflower Advisors
All 401(k) investors: Strictly as an investor, there is no doubt today's news is awful. It is hurting the markets. But if you have a long-term plan for the next 15 to 20-plus years, it is really more of a buying opportunity than anything. I don't want to say it's a bottom, but it is certainly starting to feel like a bottom. For the 401(k) investor, this is a good time to rebalance and stick with it.
Merrill Lynch customers: I would definitely be a little more concerned if my retirement plan was run by Merrill Lynch. Your money is not at risk at all because the money is in mutual funds. Nothing is owned by Merrill Lynch at all. You can probably expect some changes to the customer service, the administration, things like that.
Hal Rogers, founder and chief retirement strategist at Retirement Services LLC in Jacksonville, Fla.
All 401(k) investors: The news today is obviously a piece of a much bigger picture. You have to try to decide if this is just a temporary phenomenon or if this is something that is happening long-term. If you believe this is temporary, you just make your next deposit and everything will work out because you are buying when the market is down. If this is a more long-term downturn, then people should be switching to bonds and not be in the market at all. If you're only looking at this issue, the answer is ride it out. I've never been reactionary to this morning's newspaper. With all of this stuff, the answer is this too shall pass.
Merrill Lynch customers. All of us grew up with Merrill Lynch. Before we got into the industry, there was Merrill Lynch, and now there is no more Merrill Lynch. Theoretically, the transition should be seamless. It shouldn't matter who has the reins on the shoebox. A custodial account is nothing more than a shoebox that holds the investment. It has no effect on the investments inside the custodial account.
David Snetro, senior vice president, retirement services, at RDM Financial Group in Westport, Conn.
All 401(k) investors: This one of those emotional periods. If you have good asset allocation, you should keep plugging forward and not do anything emotional in response to a declining market. Talk to your financial adviser, and make sure you have good, solid asset allocation. Once you have that plan in place, you have to detach yourself from the current news. The cycle will smooth back out. When you try to make a short-term, market-timing move, you are going to take a big loss and take yourself out of the environment that will snap back. It's really a test of the resolve of the participant to stick with their financial plan. Do not react to financial news today by making changes that will affect your long-term performance. Consult your financial professional.
Merrill Lynch customers: If your 401(k) plan is with Merrill Lynch, you need not worry. All those assets are secure. What people need to worry about is if you own your own company stock. Any company stock is vulnerable. Diversification means you never want to get caught holding on to a security that is too much of your asset allocation.