In an effort to provide clients with greater flexibility and choice, Bank of America Corporation BAC is lifting the ban on commission-based trading in retirement accounts.
In 2016, BofA’s Merrill Lynch stopped offering commission-based retirement accounts in order to comply with the Labor Department's fiduciary rule.
The Obama-era regulation had been designed to protect investors from conflicted investment advice. The rule required brokers to place their clients’ interests first when offering retirement advice.
While some of the consumer advocates said that the rule was helpful in increasing scrutiny, other industry groups argued that the rule would make it more difficult for savers to find an affordable advice.
Recently, the head of Merrill Lynch’s Wealth Management division, Andy Sieg stated, "In response to client feedback, we're announcing steps today that will provide our clients with greater choice and flexibility, while maintaining our support for a Best Interest standard for investment advice across all accounts."
As the company is now reversing the ban, Merrill Lynch’s customers, who have individual retirement accounts, will be in a position to make commission-based trades in the accounts from Oct 1, 2018.
This will help the customers in choosing such a brokerage relationship in which the adviser will be paid according to every transaction i.e. a per-transaction charge rather than a fee that is based on the amount of assets.
Notably, commission-based trading is considered less expensive for those accounts that do not involve a lot of trading activity.
BofA has been taking various efforts to improve its digital offerings as well. The company continues to align its banking center network according to the customers’ needs. Moreover, by 2022, it intends to open 500 centers and redesign more than 1,500 centers with technology upgrades. The company is opening fully automated branches that are going to feature ATMs and video conferencing facility, allowing customers to communicate with off-site bankers.
Shares of the company have gained 28.7% in the past year, outperforming 15.7% growth of the industry.
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Currently, BofA carries a Zacks Rank #3 (Hold).
A few better-ranked stocks from the finance space are SunTrust Banks, Inc. STI, On Deck Capital, Inc. ONDK and Comerica Incorporated CMA. All these stocks currently sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
SunTrust’s Zacks Consensus Estimate for the current year has been revised 6% upward in the past 60 days. Its shares have gained 32% in the past 12 months.
On Deck Capital witnessed an upward earnings estimate revision of 32.3% for the current year over the past 60 days. Its share price has increased 75.3% in the past year.
Comerica’s Zacks Consensus Estimate for the current year has been revised nearly 5.1% upward in the past 60 days. Its shares have gained 39.6% in the past 12 months.
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