This upcoming April, the Department of Labor’s landmark fiduciary rule is scheduled to take effect. How does this rule benefit you, and how is the Trump administration approaching it?
Contrary to popular belief, today many American families are not working with an advisor that is legally obligated to put their clients’ best interest first. Changing this status quo was the primary purpose of the DOL’s landmark ruling. Beginning in April, barring any changes, if you are receiving individualized investment advice on the following account types, then your advisor must be acting in a fiduciary capacity. This means putting your interests above their own, fully disclosing all fees and commissions, and not concealing any potential conflicts of interests.
- Individual Retirement Accounts (IRAs)
- Employer-sponsored plans including: 401(k), 403(b), employee stock ownership plans, SEP plans, SIMPLE IRAs, and pension plans
Last Friday, Trump signed an executive order to have the DOL review the rule, which could result in its delay or dismantling. If this happens, many Americans could still be paying undisclosed fees or commissions, be placed in investments that are deemed suitable, but not in their best interest, and not be informed of potential conflicts of interest. It is also important to note, that if the ruling is somehow successfully implemented this April, the fiduciary standards do not apply to an individual’s taxable investment accounts. However, if individuals want to work with an advisor who is held to a fiduciary standard for all of their investable assets, there is a solution.
Enter the registered investment advisor (RIA).
Advisors with an RIA are held to the fiduciary standard for all assets they manage, and have been since the passage of the Investment Advisors Act of 1940. They must disclose all potential conflicts of interests, what they charge, and always place their clients’ interest above their own, no matter what type of account they manage.
After recent events, if you are concerned about the fiduciary rule’s successful implementation, or want to work with a fiduciary advisor on all of your retirement accounts, then you may want to consider seeking the services of a registered investment advisor.
Tyler D. Caveness, Jon R. Weatherly, J. Wade Lopez, CFP©, and Justin W. Lopez are wealth advisors with Lopez Wealth Management, LLC. Lopez Wealth Management is a federally registered investment advisor (RIA), with offices in Abingdon and Roanoke, VA. Lopez Wealth is an independent advisory firm serving clients through holistic financial planning and portfolio management.
Written by - Tyler D. Caveness