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NEW YORK, May 11 (Reuters) - Bank of America Corp's brokerage, Merrill Lynch, said on Thursday it will roll out a commissions-paying retirement account compatible with a new U.S. Labor Department regulation that raises the standards for client care.
The new limited-purpose brokerage IRA, which will launch on June 12, days after the start of the new Labor Department rule, will initially accept only cash and bank deposits. But the firm will later allow clients to have access to money funds, brokered CDs and concentrated stock positions, according to a memo Merrill Lynch sent to advisers, which was seen by Reuters.
The fiduciary rule, which is set to take effect on June 9, requires that brokers offering retirement investment advice put clients' interests ahead of their own.
In cases where the broker is paid a commission for selling certain investment products, under the new rule he or she must disclose that information using something called a best interest contract.
Merrill Lynch brokers whose clients chose these limited-purpose IRAs will be presented with this type of contract.
Last year, Merrill Lynch broke from its Wall Street brokerage peers in declaring it would move the bulk of its retirement clients out of traditional IRAs in response to the new rule and into accounts that charge a simpler fee based on assets.
But in the memo sent to brokers on Thursday, Merrill Lynch head Andy Sieg wrote that the firm recognizes that in a limited number of situations, a fee-based account may not be in the client's best interest. This new IRA is meant to provide an alternative for those clients.
"Today, we are announcing where we can offer more flexibility in a manner consistent with a higher standard of care," Sieg wrote.
Reporting by Elizabeth Dilts; Editing by Matthew Lewis