So Which Is It?

John Noonan Uncategorized

What was bad is now good again? We don’t think so.

The article below serves as a reminder that Wall Street does not have your best interests in mind. Here’s the short version…

The proposed “Fiduciary Rule”, by which all financial advisors would be forced to put clients’ interests ahead of their own, is now dead. Before this recent development, Merrill declared that it would switch to all fee-based accounts because it was in their clients’ best interest. But now that the rule is dead, they are going to switch back to allow commissions. This move, according to their own declaration, is not in the best interests of their clients.

Our heads are spinning. Good grief.

We believe the real story here is that so many firms, from Merrill to Ameriprise to banks to insurance companies, did not want this fiduciary rule to survive. They just want to do whatever makes them the most money, which always comes at the clients’ expense…and the clients don’t even know it.

Don’t stand for it. There’s a small number of firms out there who embrace their fiduciary duty. They do it as a choice, not needing a law to force them to do it. Find one, and you’ll be happy you did.


John & Bill


Merrill Considers Lifting Ban on Commission-Based Retirement Accounts

Review sets up a potential reversal on changes the company said were in the best interest of clients


Lisa Beilfuss

Updated June 15, 2018 4:01 p.m. ET

Merrill Lynch may reverse a ban on commissions in retirement accounts the firm manages, marking a potentially significant retreat for a leading advocate of fee-based accounts.

The brokerage arm of Bank of America Corp. BAC +0.42% banned commissions for retirement accounts in anticipation of the Labor Department’s “fiduciary rule,” which went into effect in April 2016. The regulation was meant to protect retirement savers from conflicted financial advice from brokers seeking commission income.

But the rule was thrown out by a U.S. Circuit Court in March. And the Securities and Exchange Commission is working on its own version of a best-interest rule that would apply to brokers.

That has led Merrill to review its policy, setting the stage for a potential about face on aggressive changes it had said were in the best interest of clients.

While some financial firms fought the regulation and held off on making big changes because of it, Merrill in 2016 launched a media campaign advertising its new policy and commitment to clients’ best interest. The firm said charging fees as a percentage of assets, instead of commissions on trades, is the best way to ensure retirement nest eggs are protected—what it called “a simple, open way to work that is intended to address these conflicts.”

Clients have been frustrated by the commission ban, said a person familiar with Merrill’s decision. For retirement clients with traditional brokerage accounts, the posture meant either converting to a fee-based account, moving to the bank’s cheaper online offering, Merrill Edge, or leaving the firm.

Some clients opted to leave Merrill, brokers say, because fees that typically amount to roughly 1% of assets were costlier in some cases than commissions. Some brokers felt the shift left them at a competitive disadvantage since rivals continued to allow commission-based accounts.

“While we’ll remain a standard-bearer on [the fee] front, we’d be remiss if we didn’t consider additional flexibility and choice we can provide to clients,” said Andy Sieg, head of Merrill Lynch wealth management.

The review is expected to last about 60 days. Potential changes center around relaxing restrictions on stock and bond transactions and private equity investments in retirement accounts, said a person involved with the review. “When that’s in your best interest, we’re not going to tell you that you can’t,” the person said.

Merrill’s embrace of the fiduciary rule came in stark contrast to many other firms across the industry that criticized the regulation for restricting client choice. And competitors didn’t follow after Merrill Lynch announced it was nixing commissions in retirement accounts.

Brokers at Merrill welcomed the firm’s review of its policy. “You have to be able to compete,” said one seasoned adviser, referring to rivals’ ability to continue offering brokerage services, like one-off stock transactions, to clients with retirement money.

Some expressed frustration and lamented lost clients, even if they appreciate that Merrill has signaled it may walk back the commission ban. “They jumped the gun,” one broker said, adding that it is potentially embarrassing and confusing to communicate a reversal to clients who were recently told they needed to convert to a fee-based account because it was in their best interest.

Consumer advocates said the development is a potentially positive one. “If investors who are better off in a commission account have access to one, then that’s beneficial,” said Barbara Rober, director of investor protection at the Consumer Federation of America. “We never felt a transition to fee accounts was necessary to comply” with the rule, she said.

For Merrill and others across the brokerage industry, the fiduciary rule helped speed up a shift to fee-paying advisory accounts from traditional brokerage accounts that has been under way for years. Executives like the steady—and often higher—stream of fees such accounts generate, and many say they better jibe with a fiduciary model that puts clients’ interests first and minimizes conflicts of interest. The shift has helped brokerages better compete with low-cost automated advisers and brokers-turned-independent advisers, which typically charge fees and have for decades been required to put clients’ interests before their own.

Merrill doesn’t expect a large number of accounts to flip back to commission accounts, said the person involved with the review.

Write to Lisa Beilfuss at