Merrill Lynch is relaxing restrictions on offering clients commission-based accounts, the company said in an internal memo. The decision is a reversal from its earlier strategy which had excluded such accounts as part of the firm’s plans to comply with the fiduciary rule.
"We have analyzed the limited situations where recommending a fee-based arrangement might not be in a client's best interest and have considered alternatives [to the firm's Investment Advisory Program] for these situations," Andy Sieg, head of the wirehouse, told employees Thursday.
The firm had
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The $420 million team marks the latest wirehouse exit over a lack of flexibility around the rule.
May 9 -
Despite confusion over the rule's fate, ERISA attorney Fred Reish warns advisors it's likely to go into effect without significant changes.
May 2 -
Dan Arnold expects that upheaval to lead to more movement of advisers and assets.
April 28 -
Alexander Acosta must reckon with a June 9 deadline amid a tense political debate dividing the industry.
April 27
In recent months, the wirehouse lost many advisers to rivals. Some of the departing brokers cited Merrill's fiduciary policy as the primary catalyst for their move.
"We want to be able to rise to whatever the occasion is based on the client's needs," said Patricia Bennet, who
In March,
Merrill's total headcount dropped by
Raymond James, RBC and Ameriprise were among the industry players to lure away talent from Merrill Lynch.
GETTING READY FOR JUNE 9
Among the ways Merrill plans to offer greater flexibility to advisers, the firm will roll out a limited purpose brokerage IRA in June; it will use the fiduciary's best interest contract exemption for this offering. Other wirehouses, regional firms and IBDs have also said that they would use that exemption to continue offering clients commission-based retirement accounts.
Merrill Lynch advisers will also have access to annuities within IAP by the end of May. The firm is also exploring offering additional investments through that program, including hedge funds and new-issue CDs.
The fiduciary rule's implementation date was
Merrill Lynch is "operating under the assumption that the applicability date of the Department of Labor’s fiduciary rule will be June 9," Sieg told employees, adding they can expect additional support as June approaches.
"Foremost in our mind is the need to ensure you have the resources and support necessary to provide investment advice in our clients' best interests with respect to their retirement accounts," he said.
The Labor Department has not indicated whether it will rescind or revise the regulation. But some experts and industry observers