You may have heard about the new rule from the Department of Labor that requires retirement accounts to be managed consistent with a fiduciary standard. Here's what's up. The Department of Labor has issued a rule in April of 2016 that requires all investment advisors who provide products and services to investors with retirement accounts to act as fiduciaries.
To be an investment fiduciary means that the advisor pledges to put the client's interest first at all times. And YES this is a NEW thing. Prior to this time, most financial professionals provided advice about investments under the suitability standard. Which means that they can only present products that are reasonable for a client's age and goals. But in the eyes of the law, any investment recommendations where seen as a sales presentation and if the client said OK to the recommendation, the client was responsible for the choice.
If you work with a stock broker, a registered rep or an insurance agent you will soon be in a meeting to talk about the fiduciary standard and how it applies to you retirement accounts. I know this because the new rules require special paperwork if the salesman is to continue to get paid. You can count on having a meeting.
When you meet with your person. I suggest you ask them to sign this pledge:
If they hesitate, or refuse, you should call a fiduciary advisor here in St. Paul and talk with them about your options.
I hold the Accredited Investment Fiduciary (AIF®) professional designation. And I have held this designation for five years. I pledge to my clients that I will follow the fi360 AIF® Code of Ethics as follows.
To my clients, I will:
- Employ and provide the client information on the Prudent Practices when serving as an investment fiduciary and/or advising other investment fiduciaries.
- Act with honesty and integrity and avoid conflicts of interest, real or perceived.
- Ensure the timely and understandable disclosure of relevant information that is accurate, complete, and objective.
- Be responsible when determining the value of my services and my form of compensation; taking into consideration the time, skill, experience, and special circumstances involved in providing my services.
- Know the limits of my expertise, and refer my clients to colleagues and/or other professionals in connection with issues beyond my knowledge and skills.
- Respect the confidentiality of information acquired in the course of my work, and not disclose such information to others, except when authorized or otherwise legally obligated to do so. I will not use confidential information acquired in the course of my work for my personal advantage.
- Not exploit any relationship or responsibility that has been entrusted to me.
To my community (whether defined by work, family, and/or friends), I will:
- Proactively promote and be a steward of ethical behavior as a responsible partner among my peers in the work environment and in my community.
- Ensure that the overall promotion of my practice is implemented in the best interests of my profession.
- Seek, accept, and offer honest criticism of technical work; acknowledge and correct errors; and properly credit the contributions of others.
- Use corporate assets and resources employed or entrusted to me in a responsible manner.
- Continue to improve my knowledge and skills, share ideas and information with colleagues, and assist them.
If you like the sound of this commitment, seek out a fiduciary. They are committed you serving your best interests at all times. I believe that the fiduciary standard means you will get better advice and probably have better results reaching your financial goals.
Details about the fiduciary standard from the Department of Labor can be found at this link.
If you want to know more about working with a fiduciary financial advisor, contact my office in St. Paul at firstname.lastname@example.org. I have been a fiduciary for five years and I love to talk about this stuff. Dunncreek Advisors does not provide legal or tax advice, nor is this article intended to do so.