By Olivia Oran and Nikhil Subba
Oct 26 (Reuters) - Morgan Stanley said on Wednesday it would allow its wealth management clients to choose the way they pay the firm for retirement accounts covered by a new fiduciary rule.
The company's customers will have the choice of paying commissions or a fee based on the value of their assets for accounts subject to the new rule. (http://bit.ly/2eGID6O)
The Department of Labor rule, announced in April, sets a standard for brokers who sell retirement products and requires them to put clients' best interests ahead of their own bottom line.
The new regulation will take effect in 2018, giving brokerages time to comply.
The move puts Morgan Stanley in contrast to Bank of America Corp which said earlier this month it would eliminate individual retirement accounts that charge investors for each transaction. Investors who want a retirement account will instead need to pay a fee that is a percentage of their assets.
Bank of America's decision is intended to reduce conflicts that might arise if brokers push clients to more expensive investment products.
Morgan Stanley Chief Executive Officer James Gorman told analysts last week it does not think giving wealth clients a choice will present compliance problems.
During the third quarter, revenue from Morgan Stanley's wealth management unit rose 7 percent to $3.9 billion. The business hit a 23 percent pretax margin, in line with Gorman's target for year-end. (Reporting by Nikhil Subba in Bengaluru and Olivia Oran in New York; Editing by Bernard Orr)
