NEW YORK (Reuters) - Wells Fargo & Co (WFC.N) said it will continue to offer individual retirement accounts that pay brokers commissions and will adjust procedures to comply with a new U.S. financial regulation that requires companies to put clients’ interests first, according to a memo sent to staff on Thursday.
Wells became the latest bank brokerage to announce plans to adopt the U.S. Department of Labor’s fiduciary rule, set to take effect in April. The regulation aims to eliminate conflicts of interest in the financial advice Americans receive on retirement accounts by requiring firms to change how brokers get paid.
While there is some question as to whether industry groups or Republicans will succeed in delaying the start date of the rule, Wells Fargo’s rivals Bank of America Corp’s (BAC.N) Merrill Lynch and Morgan Stanley (MS.N) have already started making changes to comply with the rule.
In the memo, Wells Fargo said it plans to continue offering commissions-paying accounts in a way that complies with the rule’s “best interest contract exemption,” which allows firms to keep commissions-paying retirement products if they provide greater disclosure about fees to clients.
The bank said it will provide more information on specific adjustments in the coming weeks, according to the memo.
Merrill Lynch plans to discontinue retirement accounts that pay brokers commissions, while Morgan Stanley will keep offering commissions-paying accounts under the best interest contract exemption.
Morgan Stanley has said it will meet the standards set by the new regulation by retraining brokers, having clients sign additional disclosure contracts, and adding new supervisory software.
Reporting By Elizabeth Dilts; Editing by David Gregorio