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Edward Jones Maps Out Fiduciary Rule Response

The investment advisery firm Edward Jones says it will look to grandfather IRA relationships acquired before April 2017, while also instituting some fundamental changes to process and product to comply with the new fiduciary rule for ongoing and new relationships.

By John Manganaro editors@strategic-i.com | August 26, 2016
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Like many other advisory firms and retirement plan services providers, Edward  Jones is starting to roll out its formal response to the Department of Labor (DOL) fiduciary rule.

The firm tells PLANADVISER it will look to grandfather individual retirement account (IRA) relationships acquired before April 2017, while also instituting some fundamental changes to process and product to comply with the rule within ongoing and new client relationships.

Much of the change is focused on the IRA market. As the firm explains, investments in existing IRAs serviced by Edward Jones, “as well as systematic investment plans that are in place before April 10 of next year,” can continue as long as they remain in the best interest of clients. “New investment purchases won't be allowed in a grandfathered account after the rules become effective with the exception of mutual fund exchanges, variable annuity subaccount reallocations, and systematic investment plans agreed to prior to implementation. “

Instead, the firm “will create a transaction-based IRA option using the Best Interest Contract Exemption.” Initially, this will include stocks, bonds, CDs and variable annuities, the firm says. “For now, it will not include ETFs, UITs or mutual funds.”

“Right now, because there is such  pricing variability within and between mutual funds, it is difficult to align mutual funds with the requirements of the Best Interest Contract Exemption,” the firm explains. “We believe in the future the mutual fund industry will need to align around common pricing and common structures in order to meet the DOL fiduciary standard.”

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