Raymond James Financial Inc. on Thursday said it would continue to allow advisers to collect commissions for IRAs after the Department of Labor’s fiduciary rule takes effect next year.
During an earnings call, CEO Paul Reilly said that the firm expected to continue to pay its 7,146 advisers both fees and commissions for the work they do with individual retirement accounts.
In so doing, Raymond James lined up with other large broker-dealers such as Morgan Stanley and Amerprise that said this week that they would continue to pay its advisers on a commission-basis on IRAs.
Other broker-dealers such as Bank of America Merrill Lynch andCommonwealth have decided to discontinue commissions on IRAs and move to a more fee-based platform.
Raymond James said that expenses, in large part related to the DOL’s new rule, could increase by about $28 million during the company’s fiscal 2017.
The charge is part of the company’s communication and information processing area, which finished the company’s fiscal year at the end of September on its target of $280 million, said Jeffrey Julien, the CFO, on a conference call with investors.
“Going forward, I will tell you that our guidance on this would be something like 10% higher … and the biggest driver of that is the systems work that is already under way related to the DOL rule and what we’re having to do to comply with that,” Mr. Julien said during the call. “It becomes effective in the middle of fiscal 2017 for us. That’s the biggest driver, but there are other projects of course as well.”
A number of brokerage firms during earnings season so far have reported costs of the DOL’s new fiduciary rule, which requires to work under a fiduciary standard of care with clients’ retirement accounts.
Ameriprise this week reported it spent another $7 million preparing for the new rule in the quarter ended in September. It spent $7 million in the second quarter and $4 million to $5 million in the first, meaning Ameriprise has spent about $19 million on the new rule so far in 2016.
Raymond James reported total revenue of $5.52 billion for the year ended in September, an increase of 4% compared with fiscal 2015. Its net income for the fiscal year was $529 million, an increase of 5%.