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Morgan Stanley to Cut Fees Even if DOL Rule Repealed

January 30, 2017

Morgan Stanley is moving ahead with its plans to comply with the Department of Labor’s fiduciary rule despite uncertainty about its fate under the administration of President Donald Trump, Bloomberg reports.

The brokerage will implement “many” changes planned last year that it says will benefit clients and reduce potential conflicts of interest when it comes to third-party managers, according to a memo seen by the news service sent to employees by wealth management heads Shelley O’Connor and Andy Saperstein.

Morgan Stanley will go through with the plan, they wrote, “with or without the rule,” which requires retirement brokers put clients’ interests ahead of their own.

Among the changes are reductions in trade commissions on stocks and ETFs, enhancements to client disclosures and a redesign of certain products, Bloomberg writes.

In October, Morgan Stanley announced plans to continue offering commission-based retirement accounts alongside fee-only accounts. Prior to the election, the industry was already split on how to move forward with the rule, with Wells Fargo, Raymond James and Cetera joining Morgan Stanley in opting to keep commission-based retirement accounts, while Merrill Lynch decided to offer only fee-based accounts after the rule’s implementation date, scheduled for April.

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But the rule’s fate remains unknown. While Trump hasn’t addressed it directly, his campaign was decidedly against financial regulation, and one of his campaign advisors who’s now one of his aides has repeatedly called for its repeal. The rule also faces opposition among GOP lawmakers as well as court challenges from several industry trade groups.

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