Capital One Investing, the brokerage arm of Capital One Financial Corp., will be eliminating commissions on advised individual retirement accounts by next year.
The company announced Wednesday that the advised IRAs will move to level-fee pricing by April, when the Department of Labor's fiduciary rule becomes effective.
Yvette Butler, president of Capital One Investing, said it was their intention to build a business with their customer's interest right from the start.
“When we came together as a new business, we wanted to build the business around our current customers,” she said. “Since the last great recession, the customers wanted something more intuitive and digital. They want to have confidence that they are interacting with an adviser with their best interest in mind.”
(More: The most up-to-date information on the DOL fiduciary rule)
Ms. Butler said they have two types of advisers: financial advisers at branches in several states and financial planners by phone. The advisers are compensated by a salary and bonus based on customer satisfaction. Customers will need a $25,000 minimum investment to qualify for human advice.
Capital One Investing will join
a wave of brokerages including Merrill Lynch and Commonwealth Financial Network to come out with their plans to
scrap commissions on IRAs in response to the DOL rule.
The idea of Capital One Financial moving into the brokerage business came about in 2012, when it acquired ING Direct. Through ING Direct, they also acquired an online brokerage platform called ShareBuilder. Capital One launched Capital One Investing under its consumer banking division last year, after merging the financial advisory business Capital One Financial Advisors and ShareBuilder to create a hybrid human and digital financial advisory business.
Earlier this year, Capital One Investing also launched an online tool for investors to evaluate mutual and exchange-traded funds, and in 2014 launched integrated tools to help self-directed investors build and manage their portfolios.
They will primarily target their existing customers for their brokerage services. Ms. Butler said their goal is to grow the number of advisers by 30% to 40% next year. Since it was the plan to focus on fiduciary practices from the start of this business, Ms. Butler said they are not fazed by the DOL rule's uncertain future next year.
