The Labor Department’s fiduciary rule has led another major broker-dealer/RIA to stop offering commission-based products in retirement accounts.
Commonwealth Financial Network has announced that in response to the Department of Labor’s conflict-of-interest rule, they will cease offering commission-based products in all retirement accounts — both IRAs and qualified plans — effective April 10, 2017.
In outlining the rationale behind the standard, Commonwealth noted that it “wholeheartedly supports a fiduciary standard,” and that the vast majority of their business is already conducted in that manner. While acknowledging that it was a “challenging” decision culturally, Commonwealth said that they felt strongly that their decision positions the organization and their network of some 1,700 advisors advantageously for the future.
According to a press release, today less than 10% of Commonwealth’s revenue is derived from commissions on retirement accounts.
Earlier this month, Merrill Lynch announced that it would no longer give retirement savers the option of paying a commission for trades after April 10, when the new fiduciary regulation takes effect. In August, Edward Jones announced that it planned to curtail mutual fund access for retirement savers in accounts that charge commissions, while cutting the investment minimums on others.
That said, Commonwealth said that the organization continues to believe that a commission-based approach remains an attractive and appropriate option for many investors, and said that they will continue supporting that option for non-retirement accounts.
