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Fiduciary Rule Rollout Faces Additional Delays

11-14-2017 - The Department of Labor's proposed fiduciary rule, requiring financial advisors to act in the best interest of clients when providing advice about retirement accounts (IRAs, 401ks, etc.), is facing further delays. 

The fiduciary rule was initiated by the Obama Administration, which estimated it would save retirees nearly $17 billion in commissions and hidden fees by eliminating conflicts of interest  Many in the financial industry argue that the new rule would restrict retirees' choices, price investors with modest investments out of the market, and place undue compliance burdens on financial firms, particularly smaller ones. The rule was challenged in court, and in February 2017 the Trump Administration requested that the Department of Labor conduct additional studies on its economic impact. The newest delay, if approved by the White House Office of Management and Budget, would push back full rollout of the rule to July 2019.

For now, the the less stringent "suitability" standard remains in effect, requiring that advisors make recommendations that are merely "suitable" for the client. Until the issue is settled, anyone seeking advice about retirement accounts should ask their broker if he/she adheres to the fiduciary standard. (Some advisors may act as fiduciaries in some instances, but not when it comes to retirement accounts.)

Note that Registered Investment Advisors (RIA's) DO operate under the fiduciary standard.

For updates on this issue, continue to check this website and The Karp Law Firm's estate planning and elder law blog.

You can read our earlier post on this topic here

Read the Dept of Labor's latest press release on the fiduciary rule here.

  

 

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