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March 09, 2017 at 02:17 PM
With an anticipated 60-day delay to the Department of Labor’s fiduciary rule compliance date, Merrill Lynch appears to be altering its approach to commissions in retirement accounts.
In a memo shared with the firm’s 14,500-plus advisors and a conference call on Thursday, executives signaled that the company intends for the Thundering Herd’s retirement accounts to generally become fee-based, but with some exceptions.
Despite the “uncertainty in Washington,” the firm is “steadfast in its commitment to provide investment advice in our clients’ best interests, particularly with respect to their retirement accounts,” wrote Andy Sieg, head of Merrill Lynch Wealth Management.
As executives at the wirehouse have worked to meet the DOL’s requirements, they have come to recognize “that there may be limited situations in which a fee-based arrangement would not be in a client’s best interests,” Sieg said.
Thus, the wealth business is reviewing “those limited circumstances” and considering possible alternatives to its fee-based Investment Advisory Program for some clients “in a manner consistent with a higher standard of care,” he adds.
Merrill is “prepared” to implement its approach to the DOL rule next month. But the firm’s executives acknowledge that its delay “may provide us with additional time and flexibility as we work through these issues,” according to Sieg.
The wealth chief also told the Merrill advisors that product restrictions now in effect for retirement brokerage accounts will “remain in place, including restrictions on mutual funds.”
According to the wirehouse, the Thundering Herd has some 537,000 clients in its fee-based IAP, with $208 billion of client assets in IRAs, representing more than half of its total IRA AUM.
(Others products with restrictions include non-traded REITs, life insurance, health saving accounts, education savings accounts and some other special investors.)
