Recently, the U.S. Department of Labor published the final regulation of what is known as the “Fiduciary Rule,” delaying implementation for 60 days from its scheduled start date. The newly expanded definition of fiduciary investment advice is scheduled to go into effect June 9, 2017.1
The rule holds certain financial professionals to a fiduciary standard that requires them to put their clients’ interests above their own. Starting in June, that rule will extend to any financial advice regarding retirement accounts, such as IRAs and 401(k) plans.2
The Fiduciary Rule is designed to deter certain types of financial professionals from making recommendations that benefit their own financial gain rather than providing individuals with the most appropriate advice for their situation. Financial professionals who aren’t required to adhere to the fiduciary standard are held to a suitability standard, which means that their recommendations must be suitable to their clients’ situations but aren’t necessarily in their best interest. A financial professional held to the fiduciary standard, on the other hand, is legally obligated to recommend products based on the best interest of his or her client. 3
However, note that even when the Fiduciary Rule is implemented, it will not apply to non-retirement accounts.4That’s why it’s important to work with a financial adviser you trust to always look out for your best interest and who is held to a fiduciary standard.
Please note that there could still be further changes to the rule or further delays to its implementation. This is possible because back in February, President Trump issued a memorandum directing the DOL to examine the Fiduciary Rule and decide if it should be revised or withdrawn.5
Content prepared by Kara Stefan Communications
1 DrinkerBiddle. April 6, 2017. “Fiduciary Rule Delayed – But It’s Not Entirely What Was Expected.” http://www.drinkerbiddle.com/insights/publications/2017/04/fiduciary-rule-delayed?utm_source=Drinker_Communications&utm_medium=Email&utm_campaign=Fiduciary-Rule-Delayed. Accessed April 7, 2017.
2 Kathleen Elkins. Business Insider. April 6, 2016. “The Obama Administration’s New $12 Trillion-Dollar Rule Highlights a Major Misconception People Have About Financial Advice.” http://www.businessinsider.com/dol-fiduciary-rule-limited-to-retirement-accounts-2016-4. Accessed April 7, 2017.
3 Investopedia. April 18, 2017. “DOL Fiduciary Rule Explained as of April 18, 2017.” http://www.investopedia.com/updates/dol-fiduciary-rule/. Accessed April 20, 2017.
5 DrinkerBiddle. April 6, 2017. “Fiduciary Rule Delayed – But It’s Not Entirely What Was Expected.” http://www.drinkerbiddle.com/insights/publications/2017/04/fiduciary-rule-delayed?utm_source=Drinker_Communications&utm_medium=Email&utm_campaign=Fiduciary-Rule-Delayed. Accessed April 7, 2017.
We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.
The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.