Merrill Opens ‘Pandora’s Box’ With Shift on Commissions: Analysts

While self-directed brokerage accounts are good options for many clients, they are not "the ideal replacement for all clients, in our view," the analysts say.

Overall, more changes at Merrill are on the horizon.

"Given the uncertainty around the fate of the fiduciary rule, we would not be surprised if the company decided to give itself more optionality to deal with the final outcome," they said.

Walk Back?

In discussing its latest views on the DOL matter, the firm's wealth management chief, Andy Sieg, said that despite the "uncertainty in Washington," Merrill Lynch is "steadfast in its commitment to provide investment advice in our clients' best interests, particularly with respect to their retirement accounts."

However, its executives have come to recognize "that there may be limited situations in which a fee-based arrangement would not be in a client's best interests," Sieg added.

Thus, the wealth business is reviewing "those limited circumstances" and considering possible alternatives to its fee-based Investment Advisory Program for some clients "in a manner consistent with a higher standard of care," he adds.

Merrill is "prepared" to implement its approach to the DOL rule next month. But the firm's executives acknowledge that its proposed delay "may provide us with additional time and flexibility as we work through these issues," according to Sieg.

The wealth chief also told the Merrill advisors that product restrictions now in effect for retirement brokerage accounts will "remain in place, including restrictions on mutual funds."

The Thundering Herd has some 537,000 clients in its fee-based IAP, with $208 billion of client assets in IRAs, representing more than half of its total IRA AUM.

(Others products with restrictions include nontraded REITs, life insurance, health saving accounts, education savings accounts and some other special investments.)

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