October 19, 2016 / 3:31 PM / a year ago

Morgan Stanley to detail plan for fiduciary rule compliance soon: CEO

(Reuters) - Morgan Stanley plans to announce in the coming weeks how its wealth-management business will comply with a new U.S. rule intended to protect retirement savers, Chief Executive James Gorman said on Wednesday.

Morgan Stanley Chairman and Chief Executive James Gorman speaks during the Institute of International Finance Annual Meeting in Washington October 10, 2014. REUTERS/Joshua Roberts

Gorman declined to give details, but hinted that providing wealth clients with choice about account options and how they pay the firm is a priority.

“Giving (clients) a choice of how they deal with the firm, services they access, how they pay for those services, is critical to how we operate as a firm,” Gorman said during a call with analysts to discuss earnings. “Choice has been a fundamental guiding light for the firm and that is unlikely to change.”

Known as the fiduciary rule, the new regulation was announced in April by the Department of Labor. It sets a standard for brokers who sell retirement products and requires them to put clients’ best interests ahead of their own bottom line. It starts to take effect in 2018, giving brokerages time to comply.

Gorman’s guidance comes in contrast to rival Bank of America‘s, which said its wealth business would eliminate individual retirement accounts that charge investors for each transaction.

Investors who want a retirement account will instead need to pay a fee that is a percentage of their assets. The move is intended to reduce conflicts that might arise if brokers push clients to more expensive investment products.

Giving wealth clients a choice won’t present compliance problems to Morgan Stanley, Gorman said.

“I don’t think that giving clients choice heightens one’s legal exposure and, in fact, that just seems a little counterintuitive,” he said.

Reporting by Olivia Oran in New York; Editing by Nick Zieminski

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