Last week, the Department of Labor (DOL) released its long awaited new “fiduciary rule” (see http://www.dol.gov/ebsa/regs/conflictsofinterest.html) which provides a new interpretation of the term fiduciary that will affect all financial service professionals in providing fee for advice for all retirement accounts, including IRA’s.  The previous standard required recommendations to be “suitable” for investors’ retirement accounts; not necessarily in the best interest of their clients.  In fact, many recommendations involve higher fees, commissions and bias in terms of pushing proprietary products.  Essentially, these conflicts in giving advice is why this new rule was developed.  As proposed, this rule, which takes effect on January 1, 2018, will hold retirement investment advice to a fiduciary standard, i.e., to be in the best interest of the client.  

How will this impact you?
Complying with the new rule will be gradual and the proposed timeline may change.

Plan on the “advice” from insurance agents and brokers to be pretty much the same but with reams of disclosures and contracts which, in many cases, will continue to enable the advice to still be questionable in terms of being in the client’s best interest; or, advice will move in the direction that Maxele Advisors has always worked for clients: as a fee only advisor, held to the Fiduciary Standard, with recommendations in the best interest of the client. 

As currently written, this new rule will even effect our firm in our conduct of IRA transfers/rollovers from retirement plans.  Additionally, there may likely be modifications to the rule; professionals and clients will need to continue to digest these changes.

Steve Erken, CFP®
Principal
April 14, 2016