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Thursday, August 18, 2016

Edward Jones Preps Mutual-Fund-Free IRAs

News summary by MFWire's editors

A giant broker-dealer is creating a new, mutual-fund-free, commission-based IRA to adapt to the Department of Labor's fiduciary regulation. Its IRA clients who want mutual funds will need to shift into a fee-based advisory (i.e. non-commission) account instead.

Jim Weddle
Edward Jones
Managing Partner
Jim Weddle, managing partner and head of Edward Jones, talks to the Wall Street Journal about how the St. Louis-based B-D is preparing for the DoL, which is scheduled to start taking effect in April 2017 and fully take effect by January 2018.

Edward Jones has four million clients in retirement accounts, the WSJ reports. Its new, commissioned-based IRAs will require a minimum investment of $100,000 ($10,000 for variable annuities) and will give access to bonds, certificates of deposit, stocks, and variable annuities, and Edward Jones advisors will use the best-interest contract exemption under the new reg.

Mutual funds will not be available in the new IRAs "without more consistent pricing", the WSJ writes. Yet Weddle leaves the door open to including mutual funds further down the line. He tells the WSJ that the Edward Jones team has already talked to the mutual fund industry about the problem.

"If they can bring a more aligned approach to that pricing, we would reconsider including them in the future," Weddle tells the WSJ.

Meanwhile, Weddle reveals, on August 20 Edward Jones will cut investment minimums on some fee-based advisory accounts. Such accounts will continue to include mutual funds.

The article offers other tidbits about Edward Jones' plans for adapting to the fiduciary reg. Notably, Weddell tells the paper that the broker-dealer has already spent roughly $25 million on adapting and will spend, in the WSJ's words, "about twice that much between now and April."

Edward Jones has 13,500 FAs spread across more than 11,000 offices in the U.S. and another 550 offices in Canada. 

Edited by: Neil Anderson, Managing Editor


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