Despite Fiduciary Uncertainty, Wells Fargo Details Compliance Plans
December 01 2016 - 2:40PM
Dow Jones News
Wells Fargo & Co. will continue to allow retirement savers
who work with its brokerage arm to pay a commission for trades to
comply with new conflict-of-interest rules on retirement accounts,
according to a memorandum viewed by The Wall Street Journal.
The bank detailed its plans for compliance with the Labor
Department's so-called fiduciary rule despite speculation it will
be dismantled by Republicans and Donald Trump next year. The rule,
which is set to take effect in April, requires brokers to act in
the best interests of their clients when it comes to retirement
accounts.
"While there is a great deal of speculation in the media on how
the election results will affect the DOL rule, none of us can say
with certainty what will actually happen," Wells Fargo said in the
memo to its more than 15,000 brokers Thursday, adding that while it
is planning for a variety of different scenarios, it is preparing
for the rule's April implementation.
Wells Fargo's brokerage arm, Wells Fargo Advisors, which has
more $1.5 trillion in total client assets, said it would allow its
brokers to continue offering individual retirement accounts that
charge investors per-transaction commissions, an approach toward
compliance with the rule also taken by brokerages such as Morgan
Stanley and Edward Jones.
However, clients in those accounts after April will have a
slimmer menu of investment products to choose from, people with
knowledge of the matter said, although details of those offerings
weren't clear at this time. Edward Jones, for example, won't allow
retirement savers to pay a commission for mutual funds next
year.
The approach differs from those taken by Bank of America Corp.'s
Merrill Lynch and J.P. Morgan Chase & Co., among others.
Merrill and J.P. Morgan said in recent months that they would ditch
the industry's traditional commission-based sales model for
retirement accounts and effectively will offer only IRAs that
charge a fee based on a percentage of assets starting next
year.
Write to Michael Wursthorn at Michael.Wursthorn@wsj.com
(END) Dow Jones Newswires
December 01, 2016 14:25 ET (19:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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