Merrill Lynch gives insight to how firms may treat trail commissions post-DOL fiduciary rule

InvestmentNews
November 08, 2016

Following Merrill Lynch's announcement last week that it would eliminate its commission IRA business when the Labor Department's fiduciary rule goes into effect next year, observers may be wondering: What will happen to trailing commissions on already-established brokerage retirement accounts?

Merrill brokers will only be able to keep their trail commissions on grandfathered accounts, or those clients who remain in a Merrill IRA brokerage account existing before April 10 next year, the implementation date for the regulation, according to a company spokeswoman.

For current brokerage accounts transitioned onto Merrill One, the wirehouse's investment advisory platform, or onto its self-directed brokerage or robo-advisory platform, the firm's 14,000 advisers will lose any trail commissions.

That approach may pose a challenge for broker-dealers looking to follow a similar compliance route to Merrill Lynch by going all-in on advisory business, widely viewed as a less risky way to comply with the rules.

“When you have a lot of trails like that, I've known advisers where they've taken six-figure hits by dropping it,” Duane Thompson, senior policy analyst at fi360 Inc., a fiduciary consulting firm. “It can be big.” Read More.