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Edward Jones May Reverse Stance on Mutual Funds in Commission Accounts

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Three months ago Merrill Lynch told its Thundering Herd that it planned to explore “options” for those clients who might benefit from commissions in retirement accounts — a shift from its earlier fee-only approach to the new Department of Labor fiduciary rule.

This week, Edward Jones made a similar change in tactics ahead of the rule’s June 9 effective date just as House Republicans moved to introduce legislation that aims to overturn the new rule.

“Additional flexibility granted by the Department of Labor has created the possibility that Edward Jones will be able to offer our clients mutual funds in a commission-based account during the transition period to implement the DOL’s fiduciary rule,” from June 9 to Jan. 1, 2018, the broker-dealer said in a statement.

Edward Jones, which is based in St. Louis, adds that it “hopes to roll out this new account by midsummer.” 

“Based on recent guidance from the DOL, including the FAQs and Field Assistance bulletin that accompanied Secretary [R. Alexander] Acosta’s op-ed in the Wall Street Journal, we believe we can structure a new account that will allow for mutual funds in a transaction-based IRA as the industry works to develop and implement long-term solutions,” it explained.

The broker-dealer has about 14,000 advisors and tries to bring in about 3,000 new reps a year — many of whom are making a career change from work as teachers, for instance, or from military service. It launched a major advertising push to boost recruiting in April.

As for what options clients can turn to at present, the firm points to its commission-based Select Retirement Account, which has a minimum investment of $100,000, allows for ETFs and other products but not mutual funds and was introduced in response to the Labor rule.

Other options are fee-based, client-directed accounts or emphasize model portfolios selected by the firm, which include mutual funds, ETFs and (in some cases) other products.

— Check out Will Edward Jones’ New Ads Lure Experienced Advisors? on ThinkAdvisor.

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