Fiduciary Snapshot Series: Life One-Month After the Rule
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Over a Month After the Fiduciary Rule’s Phase 1 Deadline

It’s been over a month since the June 9, 2017 deadline has passed for the Phase I implementation of the Department of Labor’s (DOL) Fiduciary Rule. According to a new survey taken in April and May 2017, advisors report little disruption to their clients during the transition. As with most negotiations, it seems like the result has settled on some middle ground. While changes are still being discussed in Washington, it seems like positive adjustments are beginning to be made.

What is the Fiduciary Rule?

The Fiduciary Rule, as it currently stands, mandates that all financial professionals act in their clients’ best interests when it comes to retirement accounts. This includes 401k’s, individual retirement accounts (IRAs), and other retirement-qualified funds. The rule doesn’t affect non-retirement accounts.

For the first phase of the rule’s implementation, financial advisors who work with retirement accounts must give advice that meets DOL impartial conduct standards. The impartial conduct standards require advisors to give advice that is in the best interest of the client, to not receive compensation that is in excess of what is reasonable, and to not make materially misleading statements.

Advisors to retirement plans still have until January 1, 2018 to comply with the rest of the requirements (Phase II of the implementation), and it is possible the rule may change between now and then. In the past, many brokers – or “financial advisors” who are not fiduciaries – simply had to meet a “suitability standard,” meaning that they could conceivably steer retirement clients into products that paid the advisor a higher commission, as long as that product was “suitable” for that retirement client.

[Is it time to break up with your broker?]

Personal Capital & The Fiduciary Rule

Personal Capital’s tools allow users to find many of the hidden fees and compare them all in one place. We hope there are no further repeals to the rule as we believe in the need for transparency in the financial world.

As a Registered Investment Advisor, Personal Capital not only follows the fiduciary standard, but also embraces it as part of our mission to provide financial advice that is in the best interest of our clients.

The Latest Buzz

    • Following the Fiduciary Rule – Many financial advisors in the United States who are not thrilled with the Fiduciary Rule fear that it will create extra bureaucracy (and possibly less commission for them). While putting clients first should be the standard underlying all investment advice, historically, investors are given advice to buy expensive products, even when cheaper alternatives may exist. But it’s not just financial advisors who should be held to a fiduciary standard. What would it look like if all those in positions of responsibility – such as banks or energy companies – had to follow the Fiduciary Rule? Read more
    • House Committees Ready Two Assaults on DOL Fiduciary Rule this Week – On July 26, 2017 the House Education and the Workforce Committee will vote on legislation that would repeal the Fiduciary Rule and replace it with an advice-standard based on disclosure. The House Appropriations Committee will take up a Department of Labor (DOL) funding bill for fiscal year 2018 that contains a rider preventing the agency from enforcing the Fiduciary Rule. This bill would leave retirement savers with fewer protections than they enjoyed before the DOL’s Fiduciary Rule was finalized. Read more
    • SEC’s Jay Clayton makes fiduciary duty a priority, acknowledges issue is ‘complex’ – In his first major address since taking office in May, SEC Chairman Jay Clayton explains that the Fiduciary Rule is one of their priorities and hopes to work with the DOL on an advice standard. Clayton and DOL Secretary Alexander Acosta’s recent Capitol Hill appearances display their pledge to work together on a fiduciary rule. Read more

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The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.

Any reference to the advisory services refers to Personal Capital Advisors Corporation, a subsidiary of Personal Capital. Personal Capital Advisors Corporation is an investment adviser registered with the Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training nor does it imply endorsement by the SEC.

Amin Dabit is the Vice President of Advisory Services at Personal Capital. Amin brings over a dozen years of experience in private wealth management and financial planning. Amin leads Personal Capital's advisory team to identify and establish strategies for reaching clients' financial goals by providing comprehensive, customized financial advice designed to improve their financial lives.
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This year, my top financial priority is:

Building my emergency fund
Paying off high-interest debt
Budgeting better
Saving for a short-term goal, like a vacation or new car
Increasing my investment contributions
Maintaining status quo - I’ve got this under control

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