Put
Stifel Financial Corp. in the column of brokerage firms that will continue to pay both commissions and fees to advisers who work with client retirement accounts.
The past month has seen a steady roll call of major firms revealing their plans and compensation models to deal with the new Department of Labor fiduciary rule, which raises adviser standards when providing retirement advice and takes effect next April.
“On one end of the spectrum, several firms have decided to eliminate commission-based accounts entirely, while others have indicated a business model which will more significantly use the best interest contract exemption, or as it is referred to, the BICE,” said
Stifel CEO and chairman Ron Kruszewski
during a conference call Thursday morning with investors and analysts to discuss third quarter earnings.
“At Stifel, we are taking a balanced approach which preserve choice while recognizing new fiduciary requirements,” he said.
“Over the last several months we have communicated plans for our platform and timetable to all of our advisers,” said Mr. Kruszewski, who added the firm would reveal expenses related to the new rule at a later date. “With respect to choice, we have supplemented our advisory platforms with new capabilities, programs and — importantly — have reduced minimums. Where it makes sense we will utilize the BICE, but we believe this option is more weighted to larger accounts.”
“This rule continues to evolve and we continue to evolve with it,” he said.
Merrill Lynch kicked off the proclamations early last month when it said it was scrapping new commission IRAs in favor of advisory accounts.
Last week, four more firms that house thousands of financial advisers showed their cards on the fiduciary rule. Morgan Stanley, Ameriprise Financial Inc. and Raymond James Financial Inc. said they would continue to offer commission in clients' retirement accounts, while Commonwealth, like Merrill, said it was making a wholesale shift away from commissions in IRAs and qualified retirement plans.
And this week, Cambridge Investment Research Inc. and the Cetera Financial Group network of broker-dealers said that they too will continue to pay both commissions and fees to advisers who work with clients' retirement accounts.
Stifel Financial on Wednesday reported third quarter net income available to common shareholders of $16.3 million, or 21 cents per diluted common share. In the third quarter of 2015, Stifel reported net income of $17.2 million, or 22 cents per diluted common share. During the third quarter, the firm issued a preferred dividend of $1.56 million, which reduced the earnings available to common shareholders.
