According to a report published this week by Reuters and subsequently confirmed by PLANADVISER, starting in April 2017, clients of JP Morgan Chase Wealth Management, Private Bank and J.P. Morgan Securities will no longer have access to commission-based retirement accounts.
Reuters reports that existing clients will be presented with two options that are designed to comply fully with the Department of Labor’s (DOL) pending fiduciary regulations—they can chose to pay a financial adviser a flat fee based on the amount of assets carried in their account, or they can use an online platform to manage their account in a self-service capacity.
According to the Reuters reports and others, only about a 5% fraction of JP Morgan assets are held in retirement accounts; only those in commission-paying accounts will be affected by the change.
The firm declined to share additional details about its plans to comply with the new fiduciary paradigm, but it joins a host of others to announce significant changes to compensation structures aimed at getting advisory forces on the ground out ahead of the DOL rulemaking. Notably, Merrill Lynch just announced it would accelerate its fiduciary rule response; the firm initially planned to halt commission-based brokerage sales to retirement accounts when the first DOL fiduciary rule deadlines arrive in 2017, but it has instead decided to halt the practice immediately to head off any potential issues. Commonwealth Financial Network is another firm to have made such a move recently, as well as Morgan Stanley, which stands out from some of the others by suggesting it will be willing to use the best-interest contract exemption on a large scale.
It should also be observed that, with the results of the presidential election finally known, the implementation of the DOL fiduciary rule may be significantly impacted by a Republican-dominated federal government.