Morgan Stanley, Ameriprise Opt to Keep Commissions for Retirement Accounts
As implementation of the Department of Labor’s (DOL) fiduciary rule nears, two broker-dealers have decided to continue to charge commissions for their retirement account services.
According to InvestmentNews
, Morgan Stanley has decided to allow its brokers to use the Best Interest Contract Exemption, or BICE, to continue offering individual retirement accounts that charge investors for each transaction made.
Meanwhile, InvestmentNews also reports
that Ameriprise CEO and Chairman Jim Cracchiolo has announced that his firm and its roughly 10,000 advisers will also continue to charge commissions for those accounts, though he cautioned that the firm will likely cause Ameriprise to “narrow” its platform of investment products for its advisers and also to focus the firm on training advisers to work under the new rule, according to the report.
Morgan Stanley will allow for different pricing of products based on “neutral factors,” such as the time and effort put into the recommendation, as well as based on the product’s complexity, says InvestmentNews. It is also drafting commission and pricing schedules to offer commission-based retirement savers greater disclosures that the exemption effectively requires, according to the report. The report notes that Morgan Stanley clients
can also choose to move their IRA to a fee-based arrangement.
In its quarterly earnings report, Ameriprise said it spent $7 million during the third quarter to prepare for the DOL’s new fiduciary standard rule for retirement accounts, bringing the year’s total spend in preparation for the regulation to nearly $19 million.
Earlier this week, Commonwealth Financial Network announced that in response to the DOL’s conflict-of-interest rule, they will cease offering commission-based products in all retirement accounts — both IRAs and qualified plans — effective April 10, 2017. Merrill Lynch had previously announced that it would no longer give retirement savers the option of paying a commission for trades after April 10, when the new fiduciary regulation takes effect, while Edward Jones announced back in August that it planned to curtail mutual fund access for retirement savers in accounts that charge commissions, while cutting the investment minimums on others.