Merrill suggests it may reverse course on commissions

Merrill told its 14,000 advisers Thursday that there may be limited circumstances when commission retirement accounts will stay.

Mar 9, 2017 @ 7:00 pm

By Greg Iacurci

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The head of Merrill Lynch Wealth Management signaled Thursday the firm may back off its wholesale scrapping of commissions in retirement accounts under the Department of Labor fiduciary rule.

The wirehouse had announced in October that it would no longer offer new, advised commission IRAs when the regulation went into effect April 10, and would shift entirely to advisory accounts, which assess clients a level fee for service. (The Trump administration is currently seeking a delay in that date.) Merrill was the first — and one of only a handful of firms — to announce a shift away from commissions because of the rule change.

However, Andy Sieg, Merrill's wealth management chief, sent a note to the firm's 14,000 advisers saying that may no longer happen in certain circumstances.

"As we've worked over the last year to meet the requirements of the DOL's Conflict of Interest Rule, we've recognized that there may be limited situations in which a fee-based arrangement would not be in a client's best interests," Mr. Sieg said. "We are reviewing those limited circumstances to consider potential alternatives to [the Investment Advisory Platform] for some clients in a manner consistent with a higher standard of care."

Examples of those circumstances may include private equity and concentrated stock positions, according to a source at Merrill with knowledge of the company's plans.

Feedback

Merrill is reviewing its original position on commissions based in part on feedback from advisers and clients.

Mr. Sieg said the firm's advisory platform would still be the primary vehicle for delivering fiduciary investment advice to clients, even if the DOL rule is delayed beyond its current implementation date. Mr. Sieg conceded a delay "may provide us with additional time and flexibility as we work through these issues."

The firm is also transitioning its institutional retirement plan platform to a fiduciary model, Mr. Sieg said, without offering any additional details.

Product restrictions currently effective in brokerage IRAs, such as those on mutual funds, non-traded REITS, life insurance, health savings accounts and education savings accounts, will remain in place.

Merrill is currently working to shift products such as annuities and hedge funds to its advisory platform, and as this occurs they will become restricted in brokerage IRAs.

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