Why is it that every current wirehouse advisor says they're completely open-architecture, while every former wirehouse advisor says they faced pressure to sell proprietary products?
The New York Times ginned up controversy recently with its front-page story, "Selling the Home Brand: A Look Inside an Elite JPMorgan Unit," which reinforced the view that wirehouses put themselves first and clients second. Now Alicia Munnell (left), director of the Center for Retirement Research at Boston College, picks up the thread.
The trouble started with The Times exposé, which detailed how advisors at JPMorgan Chase & Co. were supposedly pressured to sell the bank's own higher-fee products. The firm responded that their advisors were permitted to sell third-party products on an open-architecture platform, but some brokers—surprise—said that they faced repercussions for doing so.
As Munnell notes in a piece posted to MarketWatch on Wednesday, the tendency to push high-fee products goes way beyond JPMorgan Chase and was the motive behind the Department of Labor's 2010 proposals to eliminate 12b-1 fees for anyone who gives advice to holders of individual retirement accounts (IRAs), including banks, insurance companies, RIAs and broker-dealers.
So she calls for a "more direct approach," one that actually bans actively managed, high-fee funds from any type of account that receives favorable treatment under the Internal Revenue Code to encourage retirement saving.
