Wells Fargo to keep commission retirement accounts under DOL fiduciary rule

Wells Fargo Advisors has elected to keep commission retirement accounts intact under a Labor Department regulation governing investment advice, a decision that comes as uncertainty looms over the rule’s fate.
The wirehouse made its announcement to its roughly 15,000 advisers and brokers Thursday in a memo, which said maintaining commissions in IRAs and 401(k)s preserves customer choice. The decision affects Wells Fargo Advisors — Wells Fargo & Co.’s employee brokerage — as well as its independent brokerage, Wells Fargo Advisors Financial Network.
The so-called fiduciary rule, which seeks to clamp down on conflicted investment advice in retirement accounts, exposes firms offering commission accounts to additional compliance costs and litigation risk.
Despite these hurdles, several large broker-dealers such as Morgan Stanley, LPL Financial, Raymond James Financial Inc., Ameriprise Financial Inc. and Edward Jones have opted to continue offering commission accounts, with restrictions in some cases.
Merrill Lynch, Commonwealth Financial Network and JPMorgan Chase & Co. aim to scrap commission retirement accounts once implementation of the rule takes effect in April, a move that would bypass many of what analysts view as the rule’s more onerous provisions.
Merrill also has maintained that only offering retirement accounts charging a flat fee on assets under management is the right way to serve clients’ best interests under the rule.
UBS Wealth Management Americas is now the only remaining wirehouse of the big four not to have made an announcement regarding its compliance decision on commissions.
Donald Trump’s victory in the presidential election and Republicans’ retention of a majority in Congress have led some to speculate the rule would ultimately be repealed.
Despite the uncertainty, Wells Fargo is forging ahead with its compliance schedule, planning to have measures in place by April next year.
“While there is a great deal of speculation in the media on how the election results will affect the DOL rule, none of us can say with certainty what will actually happen,” according to the memo. “Many different types of scenarios are possible, and we are planning for all of them.”
One such compliance detail involves a “firm-approved list of available investments for retirement accounts,” the memo said.
A person close to the firm’s decision-making said nothing has been finalized, and it’s too soon to say if the number of available investments will be reduced from those currently offered.

Related Topics: Wells Fargo & Co.