It appears that the largest employee advisor and independent advisor firms are taking a bit of a “wait and see” attitude toward news that President Donald Trump is asking for a review of the Department of Labor’s fiduciary rule, which was set to go into effect April 10.
Beyond that, several of them appear to welcome the slowdown and possible revisions to the retirement advice regulation, though they aren’t overly exuberant about Trump’s move in their public statements.
Here’s what the major broker-dealers are saying about the news:
Bank of America Merrill Lynch
The Thundering Herd may slow down but not fundamentally alter its DOL-related moves.
“Depending on what is announced, we may need to adjust the timelines for certain operational changes we have announced to ensure an orderly transition and a good client experience,” said Andy Sieg, head of Merrill Lynch Wealth Management, in a statement.
BofA Merrill announced earlier this year that it would stop offering commission-based retirement accounts. “This is consistent with our overall strategic direction and what our clients are asking for,” Sieg explained.
It also said recently that it would more clearly disclose fees paid by clients of its 14,600-plus financial advisors on account statements.
For instance, it will separately list fees for asset management services and products such as mutual funds, alternative investments and commodities, according to a Bloomberg news report.
“We will continue to move forward with many of the initiatives we have underway, reflecting our ongoing commitment to raising the standard of care we provide our retirement and nonretirement clients,” the firm said in a statement.
Morgan Stanley, which has over 15,700 registered reps, plans for its retirement account clients to have a choice of working with commissions or fees in the future; it also intends to lower some charges for trades.
“With or without the rule, we fundamentally believe that serving our clients well and continuing to lead the industry forward require that we provide an increasingly higher standard of care for our clients across both retirement and nonretirement assets. To that end, and regardless of any potential delay, we will continue to move ahead in three important areas in the coming months,” explained Shelley O’Connor and Andy Saperstein, co-heads of the wealth management unit in memo on Jan. 26.
Wells Fargo Advisors
The group has told its roughly 15,000 advisors that it will continue to offer retirement plans with either commissions or fees.
On Friday, it said: “We continue to support higher standards of care for our investment clients, and will continue to work with our regulators to that end. We also strongly encourage a harmonized standard for all client accounts, taxable and nontaxable.”
UBS, which has over 7,000 advisors in the United States, Canada and Latin America, seems to be taking an approach similar to that of Wells Fargo and Merrill Lynch when it comes to “client choice.”
“We welcome the administration’s actions to reduce unnecessary or ineffective regulation and will continue to advocate for a single fiduciary standard that preserves client choice with the [Securities and Exchange Commission] taking the lead regulatory role and with a reasonable time frame for industry implementation,” it said in a statement Friday.
With about 14,000 affiliated independent advisors, “LPL continues to believe a best interest standard is appropriate for our industry,” it explained in a statement.
“We also believe that a consistent approach to disclosure, compensation and mitigation of conflicts of interest is the right path forward for our industry. We will continue to work with the administration and Congress to ensure the industry serves the best interests of investors,” it added.
In November, when it reported its third-quarter earnings, the IBD was upbeat about its strategy to keep commissions in retirement accounts. About half of its roughly $500 billion of client assets are held in retirement accounts.
“Our efforts to be early in the market with solutions designed to help advisors meet a range of investor needs in the midst of regulatory changes are helping to create more opportunities for LPL and our advisors to grow,” said then-Chairman and CEO Mark Casady.
“We believe we are leading the industry in innovating and adapting to the changing regulatory environment,” he explained at the time. (Casady stepped down from the CEO post in January and is now executive chairman.)
In 2016, LPL said it planned to end its mutual-fund direct business, which lets its advisors hold brokerage mutual fund investments directly with sponsors, on April 10, 2017; it also explained that its new fund-only accounts will not entail IRA custodial fees, trading (or ticket) charges, inactive account or confirm fees, and fees for “systematics.”
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