US broker-dealers have, in recent years, been moving their customers from commission-based accounts to accounts that charge annual fees. This seems to be part of a worldwide trend, presaged by the UK's Retail Distribution Review in 2012, but also helped by the Department of Labour's Fiduciary Rule. The rule has, however, had a stormy passage in the courts and is now defunct.

The rule - released in its final form in 2016 under the Obama administration - came partially into force last summer. The Fifth Circuit Court of Appeals struck it down in March. The DOL, no doubt influenced by President Trump's hostile attitude to financial regulation, has since allowed it to die in the courts and the same court has issued a mandate that has given effect to its earlier judgment.

This has possibly doomed a class-action civil case against Edward Jones, the "investment company that offers a personal approach to investing" which employs 14,000 financial advisors, that began in April. The HNW plaintiffs in this case are complaining that the firm pushed them unduly into fee-based accounts, thereby charging them unnecessary fees that amounted to a dereliction of its fiduciary duty. In the relevant period, which runs between 2013 and this year, those customers did little trading and would have paid less had their accounts continued paying the firm and its advisors commissions instead of fees; the changeover, although prompted by the looming Fiduciary Rule, therefore served their interests badly. The firm greeted the news that it was being sued with the unhelpful assertion that "Edward Jones has consistently offered both fee-based and commission-based client accounts that adhere to all regulatory requirements." The complaint also alleges that Edward Jones' advisors steered clients towards some "advisory solutions" or "guided solutions" that favoured its proprietary products.

This might land Edward Jones in eventual trouble with the Securities and Exchange Commission, which wrote in a recent document entitled 2018 National Exam Programme Examination Priorities: "When a retail investor hires a financial professional, some of the most important information they receive relates to the fees charged and other compensation the financial professional may receive, such as compensation from transactions involving affiliates of the financial professional. Therefore, the proper disclosure and calculation of fees, expenses, and other charges investors pay is critically important. Examiners [i.e. visiting inspectors] will review, among other things, whether fees and expenses are calculated and charged in accordance with the disclosures provided to investors."

All that remains of the rule's influence is a temporary DOL policy that allows banks to continue to rely on the Best Interest Contract Exemption. The Fiduciary Rule forbade an advisor to receive variable commissions for conducting transactions inside a client’s retirement account; the exemption is a form of relief for advisors from that part of the rule. Only an advisor who is providing non-discretionary advice can rely on it.