It’s big day for those who have kept their eyes on the Department of Labor’s Fiduciary Rule (which, to be honest, is the entire financial industry). After much back-and-forth speculation over the future of the rule – its implementation was delayed a few months from its original April 10 deadline – Labor Secretary Alexander Acosta wrote in a Wall Street Journal opinion piece that the DOL found “no principled legal basis to change the June 9 date.” This means the rule – partially – goes into effect today.
So what is the Fiduciary Rule? The Fiduciary Rule, as it currently stands, mandates all financial professionals act in their clients’ best interests when it comes to retirement accounts. And today’s deadline means that firms and financial advisors who work with retirement accounts need to be compliant with the fiduciary definition – i.e. they must work in their clients’ best interest – as well as meet the provisions concerning conflicts of interest. They still have until the first of the year to comply with the rest of the requirements, and there’s still possibilities the rule may change between now and then.
It’s not going to be an easy road for both financial providers and their own clients, especially considering the amount of distrust and challenges American investors face when it comes to their finances. We just published the 2017 Personal Capital Financial Trust Report, which found nearly one-third of Americans believe that a financial advisor is likely to take advantage of a consumer, but on the other hand, half of Americans believe all financial advisors are required by law to act in their best interest. (They’re not – only true fiduciaries, like Personal Capital, are legally required to provide this type of advice).
Meanwhile, we here at Personal Capital have always acted as a fiduciary to our clients since our inception. Being a fiduciary is something we pride ourselves on, and as a Registered Investment Advisor (RIA), we not only follow the fiduciary standard, but we also embrace it as part of our mission to provide conflict-free financial advice.
Unlike traditional brokers, who receive commissions based on the investment products or funds they sell that often come with high hidden fees, we are completely independent and will never try to sell you something or push a product on you that you don’t need.
We hope that whatever the future of Fiduciary Rule may be, the awareness of its importance will help bridge that gap between Americans trusting who is helping them plan for their financial futures, while ensuring that the advice they get is honest and in their best interest.