With new Department of Labor fiduciary rules set to take effect next April, at least one brokerage giant is telling its advisers to watch out: Merrill Lynch has informed its brokers to stop sales of mutual funds in brokerage-based individual retirement accounts immediately – well in advance of the impending rule change.
According to Frank McDonnell, head of Merrill Lynch’s Global Mutual Funds, mutual funds may still be purchased in investment advisory program accounts and non-retirement brokerage accounts. By changing its internal guidelines in advance of the fiduciary rule change, the brokerage firm apparently is hoping to avoid any potential conflicts of interest that might arise between now and next April when the new Department of Labor rule takes effect.
The new Department of Labor fiduciary rule will require brokers to put their clients’ interests first for retirement accounts, which places a higher burden on brokers than currently exists. Merrill Lynch has become one of the first brokerage firms to make their compliance strategy public, stating that they would no longer be offering commission-based IRAs in 2017.
Investors who purchase mutual funds between now and next April for their retirement accounts would be charged commissions on the purchases, and then an additional fee for enrolling in the firm’s investment advisory program. Merrill Lynch has decided to do this to preemptively guard against any future issues and eliminate potential conflicts.
Are you invested in Mutual Funds in IRAs with Merrill Lynch?
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