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

+ Zoom

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.

0
Comments

What do you think?

View comments

Recommended for you

Sponsored financial news

Featured video

Events

Adviser marketing: 3 strategies for success

To help advisers sift through the noise and execute a marketing plan that will deliver the most ROI, three executives from Carson Group sit down with Shannon Rosic to deliver some strategies you can implement today.

Video Spotlight

The Search for Income

Sponsored by PGIM Investments

Recommended Video

Path to growth

Latest news & opinion

10 signs your client is cheating on you

Sure signs that clients may be on the way out the door.

How adviser salaries stack up to other jobs

Median compensation hovers just under $100,000 on the low end and reaches nearly $300,000 for bosses.

Finra ranking brokers in effort to crack down on industry's bad apples

All 634.403 reps have been ranked based on factors such as prior regulatory disclosures, disciplinary actions and employment history.

How to save retirement planning from tax reform

Losing big deductions, even in lieu of a larger standard deduction, may cause taxes to rise in retirement.

Advice firms in a tricky financial position

As revenue growth dips and salaries rise, nearly 90% of firms are at or near capacity.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print