The Department of Labor introduced the fiduciary rule in an effort to provide consumers with enhanced protections when receiving retirement saving advice from financial advisors and investment brokers who manage consumers’ 401(k)s, IRAs, pension plans and other retirement assets. However, in March 2018, the Court of Appeals for the Fifth Circuit invalidated the regulation and nullified the requirement that financial institutions and brokers act as fiduciaries. Due to the court’s decision, and barring any further legal action by the Department of Labor, consumers must take the time to understand exactly what they are paying for when engaging professional investment advice or risk incurring extraordinary fees over the course of their lifetime.
Under the fiduciary rule, financial advisors would have been required to do the following:
Without the benefit of the fiduciary rule, consumers may not know for sure whether the fees their advisors charge are reasonable or whether the recommendations they receive for investments are free of conflicts of interest.
Yet, it is important to know that many financial planners have long adhered to the fiduciary standard contained in the Employee Retirement Income Security Act of 1974 (ERISA) by conducting their businesses transparently and in the best interests of their clients. Additionally, many of the larger brokerage firms that had begun preparations to comply with the fiduciary rule have already changed broker compensation to a fee-based model, limiting commission-based compensation and/or offering investors a choice of fee structures and lower-cost investment products. Therefore, it behooves consumers to research the firms they are considering to work with as well as the specific advisors at those firms. This information can be found online through the Financial Industry Regulatory Authority (FINRA) website at http://brokercheck.finra.org.
About the Author: Eric P. Zeitlin is managing director of Provenance Wealth Advisors, an Independent Registered Investment Advisor affiliated with Berkowitz Pollack Brant Advisors and Accountants, and a registered representative with Raymond James Financial Services. For more information, call (800) 737-8804 or email firstname.lastname@example.org.
Provenance Wealth Advisors, 515 E. Las Olas Blvd., Ft. Lauderdale, FL 33301 (954) 712-8888.
Eric P. Zeitlin is a registered representative of and offers securities through Raymond James Financial Services, Inc., Members FINRA/SIPC.
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