Capital One Eliminates Commission-Based IRAs

As the implementation date for the Department of Labor (DOL)’s Conflict of Interest rule approaches, Capital One Investing will be moving away from commission-based products within its retirement-account services.

Capital One Investing announced that it will apply a level-fee pricing model to all its customers’ retirement accounts, while also eliminating commissions within advised independent retirement accounts (IRAs). Capital One plans to complete this transition by April 10, the date the Conflict of Interest or fiduciary rule goes into effect.

“We’re focused on building a business that puts our clients’ interests first, and embracing commission-free retirement accounts was a natural decision for us,” says Yvette Butler, president of Capital One Investing. “We’re committed to providing today’s investors a goals-based investment planning experience, while striving to take an open and transparent approach to pricing, and empowering investors to plan for the future on their terms.” 

Capital One Investing launched in 2015 with a mission to offer a customer-centric investing experience. It recently launched Advisor Connect, a phone-based service offering customers unbiased advice, the firm says. It also established Fund Evaluator, a free digital tool designed to help investors determine which mutual funds and exchange-traded funds (ETFs) sold on its online platform can best fit their individual investment objectives.

“Many investors lack confidence and trust, which can prompt them to sit on the sidelines,” says Butler. “In fact, our recent Financial Freedom survey found 41% of investors say a lack of transparency in pricing causes them to lack confidence. We’re hopeful this level-fee pricing model will empower our customers to be more confident investors.”

Capital One Investing is the latest firm to announce it would be moving its retirement account offerings away from commission-based models, in some way, in order to avoid potential conflicts of interest. Others include JP Morgan Chase, Merrill Lynch, Cambridge Investment Group, and the Commonwealth Financial Network.

The DOL Conflict of Interest rule essentially extends fiduciary responsibility as defined by the Employment Retirement Income Security Act (ERISA) to virtually anyone advising retirement accounts.