The Department of Labor (DoL) Fiduciary Rule is to be phased in from April 10, 2017 to January 1, 2018, and the date is fast approaching for financial professionals who find themselves caught within the new legislature.
The crux of the debate is that the new rule expands the definition of a “fiduciary” in an investment advice role under the Employee Income Security Act of 1974 (ERISA). From April 10th it will include all advisors who work with retirement plans or even provide retirement planning advice, binding them legally and ethically to meet the standards of the status.
Weighing in at over 1,000 pages of legal documentation, the rule will have sweeping effects across the financial advisory sector. But the impact will vary across different types of advisor. Many observers suggest those who work on commissions, such as brokers and insurance agents, will be impacted most.
The DoL’s ruling is aimed at stopping the $17 billion a year the government claims investors waste in excessive fees. The idea is that the new regulation will stop advisers from putting their own interests in earning high commissions and fees, above their clients’ interests in obtaining the best investments at the lowest prices; the definition of fiduciary leaves no room for advisors to conceal any conflicts of interest.
As financial advisors grapple with the ever evolving complexities that develop from one of the largest legal changes to the industry since ERISA, it becomes clear that amongst all the issues, the many challenges can be converged into a single question: how can advisory firms, asset and wealth managers continue to grow within this new landscape? Read More