There has been a lot of press over the last year regarding the Department of Labor Fiduciary Rule. The Ruling centers on the type of a responsibility a financial advisor has to his or her clients: a fiduciary standard (meaning that the advisor is ALWAYS required to act in the client’s best interest) or a suitability standard (advisor must merely offer suitable or reasonable advice). Most people don’t understand this distinction or even know that it exists – the assumption is that your advisor is always doing what is best for you and that assumption is not a valid one.
The DOL Fiduciary Rule, originally created under the Obama administration, requires that all financial professionals who work with retirement plans or provide retirement planning advice must act as a fiduciary. This means disclosing all conflicts of interests as well as all fees and commissions. Not surprisingly, this rule has been met with resistance from brokers and other salespeople who are primarily paid by commissions and are currently only held to a suitability standard.
The DOL Fiduciary Rule was scheduled to be phased in on April 10, 2017. On February 3, 2017, President Trump requested that the Office of Management and Budget review and analyze the impact the rule would have on the financial services industry as well as on investor’s access to advice. In order to allow time for this analysis, the implementation of the Rule has now been delayed until June 9, 2017. Secretary of Labor, Alexander Acosta has confirmed that the Fiduciary Rule will go into partial effect on June 9th with full implementation on January 1, 2018, but the law will not be enforced until next year – the focus between June 9th, 2017 and January 1, 2018 will be in helping advisers and firms comply with the new law. Specifically, beginning June 9th, those who are providing retirement advice to advisors are supposed to adhere to impartial conduct standards which include (1) giving advice that is in the best interest of the investor; (2) charging reasonable fees for that advice and (3) not make any misleading statements. Advisers are not prohibited from selling proprietary products or collecting commissions.
At Core Wealth Management, we are and will remain an independent, fee-only Registered Investment Advisor firm, dedicated to advising our clients on how to best manage their wealth. Regardless of what happens with the DOL Fiduciary Rule, we will always act in a fiduciary capacity. That’s just who we are.