June 19, 2017 | by James Behr Jr & Christopher Paleologus
You may have heard of the Department of Labor’s (DOL) Fiduciary rule that went into effect on Friday, June 9, 2017 and the confusion surrounding it. This rule requires that anyone who provides advice on retirement assets must abide by new impartial conduct standards. This includes all financial professionals, no matter what they may call themselves: brokers, financial advisors, financial planners and wealth managers. The DOL championed the rule as a protection for investors and at Blue Bell PWM we agree with the DOL that advisors should be held to the Fiduciary standard.
Some of the confusion stems from the fact that the rule requires financial professionals adhere to a fiduciary standard only on retirement accounts, not all accounts. It also requires that brokers only charge a “reasonable fee” on accounts and be more transparent with fees, transactions and any potential conflicts of interest. In theory, this rule is aligning individual investors and the professionals managing their retirement savings to eliminate financial professionals purchasing investments that benefit their firm and/or themselves rather than their clients.
The biggest takeaway from the DOL rule is that it will only cover retirement accounts such as 401(k)s, 403(b)s, Roth and Traditional IRAs. Any taxable brokerage account is not affected by the rule and many financial professionals are only required to purchase investments that fit a suitability standard; a less stringent rule that does not require them to act in your best interest. Please be sure to review your current account(s) status and any accounts that your advisor may recommend in order to help their firm comply with the new rules.
It is important to know exactly what fees you are paying and what you will be charged for any financial professional to manage your money. We have written before about this here. Advisors may put themselves out there as fiduciaries, which is now technically true, but they may only be acting as a fiduciary on retirement accounts. Investors must ask, do you work as a fiduciary on all of my accounts 100% of the time? It is also a good idea to ask advisors when they became a fiduciary. If they only became a fiduciary because they were forced to by the DOL, it has to make you wonder.
Having trust in an advisor is the most important aspect in your relationship with an investment professional. At Blue Bell PWM, we always have and always will stand by our fiduciary responsibility for every account. Our clients’ best interests is what we strive for and there will not be any changes to our obligation.
Your best interests are our best interests here at Blue Bell PWM and we take pride in upholding that responsibility. We strongly encourage you to understand a firm’s fiduciary obligation and to keep that in mind when choosing an investment professional.