BofA's Merrill Lifts Ban on Commissions for Retirement Accounts
BofA's Merrill Lifts Ban on Commissions for Retirement Accounts
(Bloomberg) -- Bank of America Corp.’s Merrill Lynch will allow commissions on retirement accounts, reversing an earlier ban that had been spurred by the U.S. Department of Labor’s now-defunct fiduciary rule.
The bank said Thursday in a statement that it is seeking to provide clients with more flexibility and choice. In June, the wealth-management unit said it would spend 60 days reviewing that policy, just months after a U.S. court struck down the Obama-era rule that had been aimed at protecting consumers from conflicted investment advice. Merrill Lynch’s systems are expected to be updated with the changes by Oct. 1, according to a memo.
The fiduciary rule, announced in 2016, sought to require brokers to put clients’ interests first when offering retirement advice. Consumer advocates argued that the rule helped increase scrutiny while some industry groups fought the measure, saying it would make it more difficult for savers to find affordable advice. A U.S. appeals court struck down the regulation in March.
Merrill Lynch said in 2016 that it would stop offering commission-based retirement accounts to help comply with the regulation. The company relaxed that ban slightly in 2017, creating a limited-purpose, commission-based account. Thursday’s announcement allows customers with retirement accounts to choose a brokerage relationship in which the adviser is paid with a per-transaction charge instead of a fee based on the amount of assets.
“In response to client feedback, we’re announcing steps today that will provide our clients with greater choice and flexibility, while maintaining our support for a best-interest standard for investment advice across all accounts,” Andy Sieg, head of Merrill Lynch Wealth Management, said in a statement.
Other regulators have sought to address the complexity of financial advice. The Securities and Exchange Commission proposed rules in April that would create a new “best-interest” standard aimed at toughening oversight of brokers. Merrill Lynch reiterated its support for consistent regulations across brokerage and investment advisory, according to the memo.
To contact the reporter on this story: Katherine Chiglinsky in New York at kchiglinsky@bloomberg.net
To contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, Dan Reichl, Steve Dickson
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