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Merrill Lynch Reverses Course on Commission-Based IRAs

May 12, 2017

Last October, Merrill Lynch was the first major firm to announce plans to comply with the Labor Department’s fiduciary rule for retirement accounts, when it decided to no longer give retirement savers the option of paying a commission for trades. Instead, the firm opted to go with fee-based accounts, in order to minimize potential conflicts tied to specific investment products.  [Financialish, 10/6/16]


Today, the firm reversed its decision and announced plans to introduce new commission-based retirement accounts, beginning 6/12/17 – days after the fiduciary rule is scheduled to become effective. On that day, such accounts will only be allowed to hold investments in money market funds and brokered CDs. Eventually, concentrated stock positions will be added to the investment mix. Merrill clients with $50 million or more with the brokerage will have the added option of being able to house private-equity and hedge-fund investments in a commission-based retirement account. Such investments are not conducive to a fee-based structure, and they’re not likely to involve much, if any, trading. The trading of stocks, bonds, ETFs, and mutual funds will not be permitted.


When all is said and done, the changes will be limited in nature - because they're intended to benefit those Merrill clients who are in special situations.