Edward Jones Backtracks on DOL Rule Commission Ban
Edward Jones is reversing its decision to ban the sale of mutual funds in commission-based retirement accounts as the Department of Labor’s fiduciary rule goes into effect, FA-IQ sister publication Ignites writes.
The brokerage plans to unveil a new account option “by midsummer” in which investors will be able to buy commission-based mutual funds, according to an Edward Jones statement seen by Ignites.
Last summer, the firm announced it would ban the sale of mutual funds and ETFs with the aim of complying with the DOL’s rule, which requires retirement advisors to put clients’ interests first. But the DOL is offering “additional flexibility” that will let Edward Jones offer mutual funds in commission-based accounts during the rule’s transition period, according to the statement.
The rule goes into partial effect Friday, with the final implementation scheduled for January 1, 2018. And in a set of answers to FAQs, the DOL recently made clear it doesn’t expect many firms to be able to implement “longterm compliance solutions” nor roll out so-called “clean shares” and mutual fund T-shares during the transition period and even for months after, according to Ignites.
Edward Jones isn’t the first major brokerage to backtrack on changes it had previously announced on how it treats retirement accounts ahead of the DOL’s rule. Last month, Merrill Lynch reversed its October decision to ban commission-based IRAs. Starting next week, the wirehouse was planning to roll out a “limited purposed brokerage IRA” that would initially allow cash and bank deposits, with plans to open the account to money funds, brokered certificates of deposit and rollovers or transfers.