Merrill Lynch, the wealth management arm of Bank of America, is reversing its ban on commission-based products in customer retirement accounts following the death of the Department of Labor’s fiduciary rule earlier this summer. The wirehouse said that requests from its customers and a new regulatory environment were the impetus behind the change.
Last year, Merrill Lynch banned brokerage retirement accounts in favor of a fee-based model to prepare for the fiduciary rule, which attempted to eliminate conflicted retirement investment advice by placing certain restrictions on commission-based product recommendations.
After the rule was overturned by the Fifth Circuit Appeals Court in March, Merrill said that its customers began questioning why their accounts were more restrictive than accounts held at rival brokerages that still offered commission-based trading.
“In response to client feedback, we’re announcing steps today that will provide our clients with greater choice and flexibility, while maintaining our support for a best interest standard for investment advice across all accounts,” said Andy Sieg, head of Merrill Lynch Wealth Management.
Merrill Lynch customers will be permitted to make commission-based trades in their accounts on October 1st.
The Securities and Exchange Commission is in the process of crafting its own broker conduct rule, known as regulation best interest, which will require brokers to act in the best interest of a retail customer when making any securities transaction recommendation.