EXCLUSIVE: Merrill Lynch to End Commission-Based Retirement Business on Retail Accounts

Merrill Lynch plans to tell its more than 14,000 brokers today that they cannot receive commissions for advice on retirement accounts, becoming the first big firm to fundamentally shift its sales philosophy in the wake of the Department of Labor’s new fiduciary rule.

The decision by the Bank of America-owned broker-dealer has broad implications that will likely affect broker compensation, hiring policies, selling contracts between mutual fund companies and brokerage firms and the growth of no-frills investment platforms such as the bank’s own Merrill Edge program for “self-directed” investors.

Merrill’s decision means brokers who generate business by persuading people to roll over 401(k) company retirement plan assets into individual brokerage accounts and who charge commissions for individual retirement accounts will have to rethink their strategies and, more practically, “repaper” current clients by shifting them to fee-based accounts, or, by sending them to Merrill Edge.

To ease the transition, Merrill will allow advisors to discount the fee charged customers who remain with the firm but have to switch their retirement accounts to the fee-based investment advisory platform known internally as Merrill One, said a person familiar with the plan.

Read on.


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