As reported by Reuters, JPMorgan Chase & Co. (JPM - Free Report) announced that it is about to stop offering fee-based retirement accounts to its clients. This is in compliance with the U.S. Labor Departments’ new fiduciary rule, to come into effect from April next year.
Per the new rule, all financial advisors are required to act as fiduciaries to their clients while giving investment advice, and managing their client’s retirement accounts.
It aims to bridge the gap between brokers and Registered Investment Advisors (RIAs). Earlier, only RIAs acted as fiduciaries to their clients. Brokers only acted as middlemen, providing education to their clients regarding their investments, but not advice.
As a result of the regulation, advisors will be prevented from placing their own interests over their clients’ in earning high commissions and fees from retirement accounts.
However, JPMorgan and some other firms like Bank of America Corporation’s (BAC - Free Report) Merrill Lynch have decided to drop transactional retirement accounts altogether, instead of going through the complications of the regulation, which includes more than 1000 pages.
Clients of the company will have two options from April. They can pay their financial adviser a flat fee depending upon the amount of money they have invested, or they can manage their retirement account on their own by using an online platform.
Chief executive of JPMorgan’s wealth management business, Barry Sommers said, "We believe this reflects how our clients are doing business today."
J.P. Morgan Wealth Management & Investment Solutions has only 5% of its managed client assets in retirement accounts. Further, only the ones in commissions-paying accounts will be affected by this move. Moreover, its wealth management clients include ultra-high net worth individuals.
Currently, JPMorgan carries a Zacks Rank #2 (Buy).
A couple of other stocks in the finance space worth a look include Carolina Financial Corporation (CARO - Free Report) and Comerica Incorporated (CMA - Free Report) .
Carolina Financial has witnessed an upward earnings estimate revision of 12.9% over the last 30 days and its share price is up 31.4% year to date. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Comerica carries a Zacks Rank #2 and has witnessed an upward earnings estimate revision of 8.8% over the last 30 days. Moreover, its share price is up 30.9% year to date.
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