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JPMorgan Kills Commission IRAs as Industry Ponders Trump’s DOL Stance

November 10, 2016

JPMorgan is the latest wealth management firm to do away with commission-based individual retirement accounts once the Department of Labor’s fiduciary rule goes into effect next April, Reuters reports. But with Republican Donald Trump winning the U.S. presidency, the rule stands an increased chance of being modified, some observers note.

Nonetheless, JPMorgan announced that come April, its retirement advice clients will have to either opt for a fee-based account or transition to an online platform to manage their IRAs on their own, according to the newswire. Of the $1.1 trillion it manages for clients, JPMorgan has only 5% held in retirement accounts, which include both commission-based and fee-based accounts, according to Reuters.

Merrill Lynch and Commonwealth Financial announced last month that they’ll no longer offer commission-based IRAs to help advisors comply with the rule, which requires retirement brokers to put clients’ interests first. Both firms said doing so reduces potential conflicts of interest when brokers recommend investment products.

But Ameriprise, Cetera, Morgan Stanley and Raymond James have opted to keep commission-based IRAs alongside fee-based accounts, arguing that the choice should be up to advisors and clients.


The fate of the rule, meanwhile, remains unknown. A campaign advisor to president-elect Donald Trump has said in the past that the rule would be repealed if Trump wins the White House. But industry experts tell MarketWatch that Trump is unlikely to do anything about the rule in the short-term, at least. And Knut Rostad, president of the Institute for the Fiduciary Standard, says that it’s not even clear where Trump stands on the rule, the news website writes. Skip Schweiss, head of advisor advocacy for TD Ameritrade Institutional, meanwhile, believes that even if Trump wanted to repeal the rule, it may simply be too late, WealthManagement.com writes. But Duane Thompson, an analyst at fi360, says that even though Trump is unlikely to overturn the DOL’s rule, he may push through legislation to change it, according to the web publication.

Other industry insiders believe the rule is in real jeopardy. Jill Hoffman, vice president of government affairs for the Financial Services Roundtable, tells the Hill that Trump will likely suspend the rule once he takes office because he promised to undo any new rules by President Barack Obama that “were not compelled by Congress or for public safety.” And Michael Lewan, former chief of staff to Sen. Joseph Lieberman, D-Conn., tells insurancenewsnet.com that the next Congress is likely to “repass” legislation to kill the rule a day or two after it convenes January 3.

By Alex Padalka
  • To read the The Hill article cited in this story, click here.
  • To read the Marketwatch article cited in this story, click here.
  • To read the Reuters article cited in this story, click here.
  • To read the Wealth Management article cited in this story, click here.
  • To read the insurancenewsnet article cited in this story, click here.