Merrill Lynch Spurns Small Investors

Merrill Lynch announced this week that it will eliminate or severely reduce compensation for its advisors on accounts under $250,000. The message to investors with accounts in this asset size range is pretty blunt, “Your account doesn’t interest us”. Other large brokerage firms are expected to follow suit shortly. Keep in mind that this is from the same folks (Big Brokerage, Inc.) who late last year spent hundreds of millions of dollars lobbing congress to successfully bury the effort to apply the same fiduciary standard that applies to investment advisors to brokerage firms. Their reasoning was that, if held to a fiduciary standard (putting their client’s interests ahead of their own), they could no longer afford to provide service to smaller investors. It appears that now their business model will not allow them to provide service to smaller investors even if they are allowed to ignore what’s best for the client.


Our firm is a small, fee-only financial planning and investment management practice. We do not sell financial products nor do we accept commissions on financial products. We readily acknowledge the fiduciary responsibility that the Investment Advisors Act of 1940 holds us to. We have found accounts of the size that the major brokerage firms are spurning to not only be profitable, but well supported by or fee- only business model. The question is, if we can do it why can’t they? We find the treatment of smaller investors by the major brokerage firms reprehensible and wonder why people continue to do business with companies so opposed to their best interest.