Financial institutions have been stuck in an awkward position since the election of President Donald Trump as they try and figure out what direction his regulatory policies will take.
Of particular concern for companies with a wealth management division are the new Department of Labor fiduciary rules that were slated to get into effect April 10.
The Barack Obama-era rules require wealth managers to be more transparent about fees charged and force brokers to act as fiduciaries and minimize conflicts of interest. The Trump administration has signaled it could trim those rules, however, and Congress has already begun that process, leading some banks to sit in a purgatory of sorts.
When asked about their plans to implement the new rules, downtown’s City National Bank – a subsidiary of Royal Bank of Canada – declined to comment, as did JPMorgan Chase & Co.
However, one wealth management outfit is taking an outspoken stance on its fiduciary policy: Merrill Lynch, the investment wing of Bank of America Corp. Newly appointed Merrill Lynch President Andy Sieg said in an interview before Trump signaled a regulatory rollback that the company had planned to implement the new fiduciary rules before the election and wouldn’t stray from that course.
“We’re not reacting to the political winds,” Sieg said. “We’re attuned to them, but we loved our strategy three months ago, and we love it now. We’re focused on clients and doing what’s best for them.”
Sieg said Merrill Lynch would do away with retirement accounts that charged commissions and instead offer a suite of services tailored to consumers. The company last week rolled out one of those offerings, a robo-advisory service dubbed Merrill Edge Guided Investing, which will charge a 0.45 percent fee on assets in the account. The offering is an offshoot of Merrill Edge, a division founded in 2010 to help customers with less than $250,000 in retirement accounts.
Sieg said he and the rest of the Merrill Lynch team were also trying to be proactive about reaching out to regulators.
“We’ve been a leading voice on Wall Street for the best-interest standard and have given lots of feedback to the Department of Labor about the current regulations,” Sieg said. “We will continue to offer up advice as they get into this issue more going forward.”
Arts District venture capital outfit Greycroft Partners announced last week the firm had closed its second growth fund, a $250 million vehicle dedicated to investing in growth-stage tech businesses.
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