(Bloomberg) — Morgan Stanley said it plans to move ahead with client-friendly changes designed to comply with federal rules despite uncertainty over whether the regulation will be implemented.
“There has been a great deal of speculation about the future of the Department of Labor’s fiduciary rule under the new administration,” including the possibility that it will be changed or scuttled, Shelley O’Connor and Andy Saperstein, who head the wealth-management division, said Thursday in a memo to employees.
The Labor Department regulation, scheduled to take effect in April, means that financial advisers handling retirement accounts must commit to giving advice in a client’s best interest and charge reasonable compensation. President Trump has called for scaling back regulatory bureaucracy that he sees as stifling economic growth and job creation. Anthony Scaramucci, one of the president’s advisers, has fought against the fiduciary rule, saying it will raise costs for financial firms and their clients.
From recommending wrong share classes to cherry-picking allocations, these are the pitfalls advisers should avoid.
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"There are ways to potentially be cute with it. You could potentially cut out retirement business from the back-end bonuses," says an ex-Merrill Lynch executive who works in the independent space. "Cute doesn't usually work when it comes to regulators."
November 2 -
The early decision stops advisers from earning commissions on products that will also generate fees through the firm's Investment Advisory Program.
November 2 -
"We fully expect to offer a range of options to help our clients," CEO Paul Reilly said.
October 27 -
The decision is effective immediately and was made within hours of the Department of Labor issuing new regulatory guidance on the fiduciary rule's implications.
October 27 -
The wirehouse, which is embracing the new regulation, is the first to unveil its strategy in depth.
October 6
Morgan Stanley will make “many” of the pricing and product design changes it planned last year, include lowering commissions for trades involving stocks and ETFs “to the benefit of our clients,” according to the memo. The firm will also seek to reduce potential conflicts of interest with third-party managers, trim redundant offerings and improve disclosures to customers.
“With or without the rule, we fundamentally believe that serving our clients well and continuing to lead the industry forward require that we provide an increasingly higher standard of care for our clients,” according to the memo.
In October, Morgan Stanley said it was keeping commission-based accounts to preserve choice for its customers, while Bank of America Merrill Lynch said it was adjusting to the fiduciary rule by ending brokerage retirement accounts.
