Some wirehouse proprietary funds are still stuck in the mud. Portability agreements between the major firms are limited to a handful of deals despite SEC pressure to make such products transferable.
A Morgan Stanley Dean Witter spokesperson says the firm has no agreements but is discussing the issue of portability with several firms. "We recognize this benefit to the individual investor and advocate the establishment of agreements," the spokesperson says. MSDW would not elaborate on the discussions or firms involved.
Currently, Merrill Lynch has a portability agreement with Salomon Smith Barney.
"It's a reciprocal agreement" in place since 1998, says a Merrill spokesperson. "If someone wants to move to SSB, they can take their Merrill Lynch funds with them. They can add to their existing account and vice versa.
"We're open to portability," the Merrill spokesperson continues. "It's the right thing for clients."
A spokesperson at PaineWebber says the firm has portability agreements with SSB and Prudential Securities and is in the process of forming one with Merrill.
Several years ago, Prudential became the first wirehouse that allowed brokers to take clients' proprietary funds with them when they changed firms.
Many no-load funds are also not portable. Most outside broker-sold funds transfer because they're part of a centralized National Securities Clearing Corp. system. Wirehouses have declined to put their own funds on that system.
The SEC began prodding firms to make funds portable after a former U.S. Congressman complained to the agency in 1996 about not being able to transfer a Fidelity fund to Merrill. In a 1998 speech, SEC Chairman Arthur Levitt Jr. said, "A world-class firm makes its proprietary products portable, confident that its offerings and advice will prevail in the marketplace."
