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Raymond James Will Keep Commission-Based IRAs

October 31, 2016

Raymond James is the latest wealth management firm to opt for offering commission-based individual retirement accounts past the implementation of the Department of Labor’s fiduciary rule, ThinkAdvisor writes.

The rule, which requires brokers advising on retirement accounts to put clients’ interests first, has prompted several brokerage firms to eliminate commissions-based IRAs, while others have argued that they would rather leave the choice up to their clients.

Raymond James, one of the largest brokerage firms with 7,150 affiliated and employee advisors, has decided to keep commission-based IRAs to allow its advisors flexibility and let clients choose between those accounts and fee-based accounts, CEO Paul Reilly said in a call with analysts last week, according to ThinkAdvisor.

Raymond James’s move follows the same decision by Ameriprise, which has 9,750 advisors, and Morgan Stanley, home to 16,000 brokers, both of which made announcements last week. Ameriprise Chairman and CEO Jim Cracchiolo said in a call with analysts that the company plans to continue offering commission-based IRAs by employing the best interest contract exemption, which allows brokers to collect commissions on certain products after signing an agreement with the client, ThinkAdvisor writes. But the firm also expects to reduce the number of offerings in order to comply with the rule, he said.


The advice industry is split on how best to navigate the DOL rule. Merrill Lynch announced earlier this month that it will eliminate commission-based accounts when the rule goes into effect in April, explaining that it will reduce potential conflicts of interests for its 14,000 brokers when recommending investment products. Commonwealth Financial, which has 9,747 advisors and brokers, announced the same move last week.

By Alex Padalka
  • To read the ThinkAdvisor article cited in this story, click here.