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JPMorgan, Morgan Stanley to Revisit DOL Rule Changes

May 7, 2018

Now the Department of Labor’s fiduciary rule is essentially dead, JPMorgan and Morgan Stanley plan to review the changes they’ve already implemented in their wealth management businesses ahead of the rule, according to AdvisorHub.

“In preparation for a repeal, we have been working on changes to the retirement opening and funding processes, as well as to our product offering for retirement accounts,” JPMorgan chief Chris Harvey wrote to advisors at JPMorgan Securities, Chase Wealth Management and Chase Private Bank last week in emails cited by AdvisorHub. A JPMorgan spokeswoman confirmed to the website that the emails had been sent but declined to comment further.

A spokeswoman for Morgan Stanley, meanwhile, tells AdvisorHub the firm also plans to review the changes it instituted to comply with the DOL rule and to “determine whether any adjustments are appropriate.”

The firm plans to restore retirement account-related revenue for calculating its new advisors’ back-end bonuses, FA-IQ sister publication FundFire reports. That revenue was removed from calculations following 2016 guidance from the DOL that said bonuses derived from such revenue could clash with the fiduciary rule, according to FundFire.

JPMorgan’s Harvey didn’t specify which changes the firm is considering but wrote that any changes would be implemented when the rule’s repeal goes into effect, according to the website.

The U.S. Court of Appeals for the Fifth Circuit, which vacated the rule in March, is expected to issue a mandate to repeal the rule Monday, Harvey wrote, according to AdvisorHub. The DOL didn’t appeal the Fifth Circuit’s March decision by its April 30 deadline, and the court struck down motions to save the rule from the AARP and three state attorneys general.

The DOL’s fiduciary rule purports to require retirement account advisors to put clients’ interests first and had gone only into partial effect last summer.

Other advice firms have also indicated the DOL rule’s repeal may prompt suspension of planned changes or reviews in light of the SEC’s proposed best interest conduct changes, according to AdvisorHub.


On Thursday, LPL Financial’s chief executive Dan Arnold said the firm is delaying a proposed mutual fund platform where it planned to standardize commissions and implement other ways to help its brokers avoid conflicts of interest under the DOL’s fiduciary rule, the website writes. A Wells Fargo Advisors spokeswoman tells AdvisorHub the firm plans to monitor SEC developments but didn’t say whether the company would make any changes to retirement accounts in light of the DOL rule repeal.

A Merrill Lynch spokeswoman tells the website the wirehouse will be watching the SEC’s proposal but adds the company has been a supporter of a best-interest standard.

By Alex Padalka
  • To read the FundFire article cited in this story, click here if you have a paid subscription.
  • To read the AdvisorHub article cited in this story, click here.