Merrill Lynch & Co. said it has updated its cash management account to let small-business owners better track employee retirement plans.

The new system lets businesses set up as many as 250 subaccounts for employees linked to Merrill's Retirement Cash Management Account.

Merrill's upgrading is another example of the changes financial services companies, including banks, are making in retirement offerings to deal with increased competition. Banks, brokerages, insurance companies, and mutual fund companies are all hoping to profit from an aging population and explosive growth in the number of small businesses.

Two more banks began offering retirement plans during the last 12 months: Charlotte, N.C.-based First Union Corp. and Cincinnati-based Fifth Third Bancorp.

Under Merrill's plan, business owners can divide retirement accounts based on investment strategy, letting employees make their own investment decisions or simplify accounting and record keeping. "This provides business owners with a high level of flexibility for how they want to do their accounting," said Les Dinkin, director of Oliver Wyman & Co., a New York consulting firm. "The convenience is a major selling point."

Business owners can decide whether to assess the fees to their master accounts or to individual subaccounts. Entrepreneurs get one monthly statement that tracks all subaccounts. Business owners can transfer funds or use checks to draw on their master accounts, but employees cannot draw on the subaccounts.

Mr. Dinkin also said the new, more sophisticated linked accounts would likely give entrepreneurs an incentive to bring both their business and personal assets to Merrill.

"This product will help Merrill Lynch increase their assets under management," he said.

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