Products October 27, 2016

Morgan Stanley Fiduciary Rule Adjustments Seek Flexibility

Morgan Stanley says its wealth management clients working with advisers “will continue to have choice in how they pay for retirement accounts covered by the new Department of Labor fiduciary rule.”
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A new sales approach announced by Morgan Stanley seeks to allow advisers to get paid either via commissions for transactions or through a fee based on the value of account assets.

“Morgan Stanley’s core values of putting clients first and doing the right thing are behind our plan for implementing the Department of Labor’s upcoming fiduciary rule for retirement accounts,” explain Shelley O’Connor and Andy Saperstein, co-heads of wealth management for Morgan Stanley. “Client needs vary by their individual situations, and they tell us they want choice in how they pay for services. We believe our advisers can most effectively uphold a fiduciary standard of care and work in clients’ best interests by continuing to offer choice.”

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Moving forward after the DOL implementation in 2017, Morgan Stanley clients who prefer transaction-based pricing “will continue to have access to retirement brokerage accounts and receive advice that complies with the DOL fiduciary rule and Best Interest Contract Exemption (BIC).” These accounts will offer a product suite including mutual funds and exchange traded products (such as ETFs) amongst other products.

Clients who prefer a fee-based retirement account, on the other hand, will also be able to pursue advisory services through that model.  

More information about the decision and the pros and cons of each approach is at www.MorganStanley.com.

Other firms to make similar announcements recently regarding ongoing use of commissions (or the halt of commission-based business) include Commonwealth Financial Network and Merrill Lynch, among others. 

Compliance October 27, 2016

NTSA Adopts Policy to Apply Fiduciary Rule to Governmental 403bs

“This policy is in keeping with NTSA’s long-standing support for effective and clear disclosure of fees, compensation and alternatives within 403(b) plans,” says NTSA Executive Director Chris DeGrassi.
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The National Tax-deferred Savings Association (NTSA) has formally affirmed its support for a fiduciary standard for all not-for-profit organizations, and the extension of the Labor Department’s fiduciary rule to governmental 403(b) plans and participants.

NTSA, an independent, non-profit association dedicated to the 403(b) and 457(b) marketplace, chose to embrace the standard, even though the Labor Department’s fiduciary rule does not apply to governmental retirement plans.

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“This policy is in keeping with NTSA’s long-standing support for effective and clear disclosure of fees, compensation and alternatives within 403(b) plans,” says NTSA Executive Director Chris DeGrassi.

As part of its support for this new standard, NTSA, in conjunction with its parent organization, the American Retirement Association, began development of a fiduciary education program in advance of the final Labor Department rule, and will make the program available to its members later this year, ahead of the April 10, 2017, implementation date of the fiduciary regulation for private-sector plans, such as 401(k)s and IRAs.

“NTSA and NTSA partners have led on these issues for many years, and will continue to work to advance professional standards in the best interests of public education employees that need these important services our members provide,” DeGrassi says. “America’s teachers need and deserve access to the best, and most transparent financial advice as they work to prepare for their future, and NTSA’s members have long been an integral part of that planning.”

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