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Merrill FAs Grumble over Dropping Commissions in IRAs

February 23, 2017

At least some Merrill Lynch advisors appear to be angry about the wirehouse’s decision to stop offering commission-based IRA accounts, InvestmentNews writes.

In October the wirehouse announced it will no longer offer commission-based IRA accounts beginning in April, coinciding with the scheduled implementation of the Department of Labor’s fiduciary rule, the publication writes. As a result, Merrill Lynch advisors have been moving clients out of commission-based brokerage accounts and into fee-based accounts, the wirehouse’s robo-advice platform or the company’s self-directed brokerage service, according to InvestmentNews.

Many advisors are frustrated or even furious over the move, Ron Edde, president and chief executive of recruiting firm Millennium Career Advisors, tells InvestmentNews.

One Merrill Lynch broker who requested anonymity tells the publication some advisors are already losing clients with millions of dollars in assets. Another Merrill Lynch advisor who also asked to remain anonymous says the wirehouse’s decision is “unethical,” according to InvestmentNews reporting. The advisors who spoke to the publication believe that clients should have choice and that the move hurts buy-and-hold investors.

Edde tells the publication that an across-the-board move that affects Merrill Lynch’s 14,000 advisors may cause some advisors to switch firms. Denise Valentine, senior wealth management analyst at Aite Group, also tells InvestmentNews that advisors faced with such a restriction may switch to firms that offer both commission- and fee-based accounts. But there’s little indication that’s actually happening at Merrill Lynch. The firm added net 129 advisors in 2016, the publication writes.

Merrill Lynch, JPMorgan Chase, Capital One Investing and Commonwealth Financial Networks were among the broker-dealers who said last year they would transition away from commission-based retirement accounts in some or all of their businesses to help their brokers comply with the DOL’s fiduciary rule.

The rule, which requires retirement brokers to put clients’ interest first, was scheduled to go into effect this April but now remains in limbo because of a memorandum President Donald Trump issued in early February requesting a review. The DOL has already asked for a six-month delay and a new public comment period. But unlike some of its rivals, Merrill has made it clear that it will not backtrack on killing commission-based brokerage IRA accounts regardless of what happens to the rule, as reported previously.


In any case, it could be difficult for Merrill Lynch to go back on its decision given the publicity campaign it unleashed about putting clients’ interests first and minimizing conflicts of interest, InvestmentNews writes. But if the rule goes through a major revamp, Danny Sarch, founder and owner of recruiting firm Leitner Sarch Consultants, tells the publication he would be “shocked” if they didn’t change their stance.

A spokesman for Merrill Lynch told FA-IQ that the wirehouse is “focused on what our clients want from us for their retirement accounts, which is to act in their best interest and minimize conflicts in our advice.”

Merrill Lynch’s offerings include its Investment Advisory Program and the Merrill Edge platform, which offers “additional choice" through "self-directed and guided investing options.”

The spokesman says Merrill Lynch is providing clients with “pricing information for each platform option, and offering pricing flexibility to clients who choose to transition their commission-based IRA to our Investment Advisory Program.”

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