"How does the New Fiduciary Rule issued by the Department of Labor affect you?"
This question comes from a good friend of mine who asked that I write this up as an Ask Garrett question. I ask that even though on the surface this may not appear to pertain to you, it most certainly does so I encourage you to read on. The short answer to this question is that this new rule does not affect me or Prominent Financial Planning in any way. Why? Because I started in this industry with a single mission: to always act in my client’s best interest (i.e. to be a Fiduciary). I did not need a rule to tell me to do so and even with the new rule it is still business as usual. These posts aren’t supposed to be about me so let me add how this new rule may impact you.
First of all, this new rule is a nice start. It states that brokers are required to act as a fiduciary (in their client’s best interest) when advising on all retirement accounts. Like I said, that is a nice start. Personally, I would like to see the rule stating that brokers are required to act as a fiduciary ALWAYS. Simple. Why doesn’t the rule state this? It is my understanding that investment firms and lobbyist fought hard and this was a more middle of the road compromise. Why would you want a financial advisor that only works in your best interest some of the time?
Second, this new rule is not final. It is a shame but there is pending litigation fighting this new rule. I’m sure it isn’t a surprise who is filing those suits. I hope this rule doesn’t get watered down any more but it is certainly a possibility that it could prior to it going into effect in January of 2018. Please take note that between now and January 2018, brokers are not required to work in your best interest even for retirement accounts.
Finally, I am still in awe that some people need a rule to tell them to do what is right. Hopefully someday everyone in the financial services industry will need to represent their clients’ best interests. At that time, would you want someone who needed to be told to do it and then changed their ways or someone who has operated that way from the beginning?