Merrill Lynch & Co. is taking off the kid gloves to deal with customers with the smallest accounts.

Like its peers, in recent years it has segmented its customers, providing different levels of service to larger and smaller accounts. Until recently the consequence was largely service enhancements for higher-net-worth accounts - clients with $1 million and up to invest.

But in February the New York company launched the Merrill Lynch Financial Advisory Center, which focuses on customers with less than $100,000. Merrill Lynch has enrolled 300,000 existing customers in the service and plans to add a further 500,000 by yearend.

These customers now must access their accounts over the phone or online.

That has freed up Merrill's brokers or financial consultants to deal with higher-net-worth customers. But some analysts wonder if Merrill's effort might make for an image problem.

At a time when financial firms are tripping over each other with initiatives to capture and keep profitable accounts, Merrill, which obviously has a relatively affluent customer base, has been careful to resist any notion that it is either moving down-market or shunting less-lucrative customers to the side.

Last month, at Merrill's investor-day presentation, E. Stanley O'Neal, president of its U.S. private client group, outlined the company's strategy in segmenting the retail investor market. In discussing the Financial Advisory Center, he insisted that Merrill was not reaching down for customers.

"When we look at serving this market segment … it is not a question of stretching our brand down-market or deciding to enter a new business," he said.

Andrew Sieg, a Merrill first vice president who has headed the Financial Advisory Center since its launch, echoed Mr. O'Neal In a telephone interview Monday.

"The client reaction has been extremely positive," said Mr. Sieg, who also took charge Monday of Merrill Lynch Direct, the company's online brokerage.

Merrill started off by contacting customers with less than $100,000, mailing brochures to them, and showing them the kind of services they can access by computer or over the phone, Mr. Sieg said. "It's been a difficult market environment, so they're pleased to hear proactively from Merrill," he said.

Services on offer through the Financial Advisory Center include two phone calls a year from a broker to customers with less than $20,000 to review their accounts. Those with $50,000 or more have access to a dedicated team of seven financial advisers, Mr. Sieg said.

The average charge for a Merrill Financial Advisor Center transaction is about $100, according to a spokesman. By comparison, customers trading online or over the phone with Schwab pay $29.95 a trade.

Industry observers said Merrill's strategy is risky. "There's always a risk when you undertake something like this that you could be turning people away who might come into money," said Diana Yates, an equity analyst with A.G. Edwards & Sons, St. Louis.

Kelly O'Donnell, a consultant with Cerulli Associates in Boston, Merrill is risking changing how customers view it.

"There will be some customers who want to deal with financial consultants, and that's why they're at Merrill to begin with," Ms. O'Donnell said.

But Mr. Sieg said that Merrill is being very cautious in who is courted through the Financial Advisory Center. For example, not everyone with less than $100,000 is automatically enrolled, he said; those with more complex needs may still be dealt with by a financial consultant.

Meanwhile, Merrill will always be looking at each client as someone who could potentially be a high-net-worth customer someday, he said. The company has not decided whether to go outside its present clientele to court lower-margin customers, he said. "That strategy is in development."

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