Commonwealth Financial eliminates commission-based retirement products in wake of DOL rule

Commonwealth Financial Network late Monday said it would stop offering commission-based products in IRAs and qualified retirement plans, making it the latest BD to move more decidedly toward to an advisory platform to avoid what some see as the more onerous provisions of the Labor Department's fiduciary rule. At Commonwealth, the plug will be pulled on commission-based retirement products on April 10, 2017, the implementation date of the new regulation. (More: The most up-to-date information on the DOL fiduciary rule) "This was a challenging decision culturally, however, as Commonwealth holds strongly to our founding belief of offering advisers both choice and the freedom to craft their businesses in the way that allows them to best serve their clients," according to a press release put out by the company. "Nevertheless, we feel strongly that our decision to cease offering commission-based products in retirement accounts positions Commonwealth and our network of advisers, as well as investors, advantageously for the future." Less than 10% of Commonwealth's revenue is derived from commissions on retirement accounts, according to the press release. The company made it clear that the new policy will not spill over to non-retirement accounts. "We continue to believe that a commission-based approach remains an attractive and appropriate option for many investors," the firm said. FOLLOWING MERRILL Commonwealth's move comes less than a month after Merrill Lynch announced it will no longer offer new, advised commission-based IRAs starting April 10, 2017. In moving to fee-based IRA accounts, Commonwealth and Merrill are actively sidestepping a provision of the rule known as the best-interest contract exemption (BICE), an exemption of the rule which would allow brokers to continue selling products under commission if they were to jump through additional compliance hoops. One of those provisions is the signing of a contract saying an investment recommendation is in a client's best interest, but which gives clients the right to bring class-action lawsuits against a financial institution.