Merrill Lynch Investment Managers (MLIM) is adding its funds to the Pershing FundCenter supermarket. The move will put the MLIM funds in front of 850 broker-dealers who use Pershing and is part of Merrill's efforts to expand its third-party distribution. The deal puts Merrill funds on a major non-wirehouse platform for the first time.

Daniel J. Dart, chief operating officer of MLIM's third-party distribution explained in a statement that Pershing is a good fit for Merrill and that it was chosen for its commitment to its products and services. Still, observers of the deal say that landing space on Pershing's supermarket shelves may be no real test of Merrill's ability to market through third parties. It also is no guaranty that advisors will welcome the funds with open arms.

"Getting on a platform is the easy part. Getting sold is the challenging part," said Geoff Bobroff, principal at Rhode Island-based Bobroff Consulting. "At the end of the day I believe that there is little interest on the part of the third-party community to sell a Merrill named fund." Advisors may fear that Merrill's brand as a provider of financial advisory services will potentially draw away their clients. Essentially, they would be opening their customer list to Merrill in a worst-case scenario. Bobroff also noted that Merrill would have to build a wholesaling team that is able to support advisor sales. It may also need to shake up its distribution payments by adding finder’s fees and R-shares to attract the notice of advisors. The fear may be assuaged somewhat by Pershing's use of omnibus accounts with its fund partners. But even if Merrill does not gain a hard and fast client list through the relationship, it would be winning mindshare with clients of advisors who sell the MLIM funds.

All told, more than sixty open-end MLIM funds will be available both through FundCenter and the FundVest Institutional no-transaction fee (NTF) platform. The NTF platform will offer 110 fund families after the inclusion of MLIM, said Brian T. Shea, chief operating officer of Pershing.

Lastly, Bobroff also pointed to one side effect of today's announcement: "By going onto the Pershing platform they have announced to the world that our shares are portable," he said. 

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