On June 9th, the Department of Labor (DOL) Fiduciary Rule will require financial advisors to act in the best interests of clients. The aim of the rule –advice must be based on the interests of the customer, rather than the competing financial interest of the advisor.
What is a fiduciary?
A fiduciary is required to act in the client’s best interests when providing investment advice for a fee or other compensation. Doctors, Lawyers, accountants can all be considered fiduciaries.
Aren’t financial advisors supposed to be acting with my best interests in mind?
It depends – some firms’ may select investments which might be more expensive – even if there are less expensive alternatives – as long as they meet “suitability” requirements. However, fiduciaries, such as SimpliFi, must act in the client’s best interest.
Why are people opposed to the rule?
Some in the financial industry complain the rule is too complex and too costly for brokers. They claim it may force firms to abandon smaller clients and/or limit the services they provide. Another argument against the rule is that it would limit the investment choices available to retirees, unduly favoring lower cost investment options. Opponents argue that the rule needs to be re-written to be more flexible.
Does the DOL Fiduciary Rule go far enough?
The Fiduciary Rule only applies to retirement accounts. The rule, if enacted, will not apply to non-retirement accounts. Imagine your veterinarian working in best interests of cats, but not dogs. SimpliFi acts as a fiduciary for all client accounts- retirement and non-retirement.