September 15, 2016
U.S. Department Of Labor Fiduciary Regulation
For those who live by the Golden Rule, “Do unto others as you would have them do unto you,” it makes sense to take care of others and clearly communicate how you can help them.
For those who live by the Gold & Rules, “Whoever has the Gold makes the rules,” it can lead to a slippery slope of self-serving actions.
Unfortunately, although the financial services industry is highly regulated, there are individuals and firms who put their own interests ahead of yours (like there are in many other industries).
It’s because of this the Department Of Labor (DOL) has come out with a new fiduciary regulation, which starts to phase in April 10, 2017. You may have heard about it in the news or in talking with us this past spring of 2016.
In essence the rule puts checks and balances on conflicted advice in the retirement space, requiring advisers, brokers and other professionals who work with retirement plans and individual investors to act as fiduciaries.
Acting as fiduciary isn’t new for Client First, we’ve been doing this from the beginning. We’ve been your transparent fiduciary all along. This new rule will mean big changes for other financial services firms as they will have increased costs due to increased regulation. This is a new way of operating for them. It requires a whole new level of disclosure, documentation and fees. Not every financial services firm will want to or be able to make it through this.
So what’s all the fuss about?
Activities such as helping clients roll over a retirement account or a recommendation to take a distribution from a plan will trigger the fiduciary requirements under the rule, which would make advisers subject to the DOL’s established standards of expert care and loyalty. Activities such as providing recommendations that would net the adviser elevated commissions or transaction fees, bringing a greater share of a client’s assets under management through a rollover will trigger a fiduciary requirement.
Advocates of the rule say it is necessary to protect workers and retirees from conflicted advice that results in high investment fees that erode nest eggs. Opponents say the rule is complex and costly and would make investment advice too expensive for people with modest accounts to attain. Still others say this is about protecting Wall Street Money Managers from losing “Baby Boomer” retirement accounts to local advisory firms.
Regardless of how you feel about the new rule, Client First we will continue with our way of operating under the Golden Rule. We will continue acting as your fiduciary, which means we have a legal and ethical responsibility to protect your investments and your financial well-being.
As a fiduciary, Client First is dedicated to putting your interests first. We have no hidden agendas and no ulterior motives. Our goal is to establish successful holistic financial planning and wealth management for your future. You have a contract with us, you know how we earn our fees and our fee structure is not changing due to this additional regulation.
At Client First, we value the close relationships we build with you. We take pride in helping our clients with their unique situation. Our primary responsibility is providing an objective opinion on your investment options while establishing a holistic financial plan for your future. We are your fiduciary.
Thank you for your trust. We look forward to navigating this new regulation with you and those you love.
All the best,
Disclaimer: Client First is registered as an investment adviser with the state of Wisconsin. The firm only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. Registration does not constitute an endorsement of the firm by securities regulators nor does it indicate that the adviser has attained a particular level of skill or ability. The firm is not engaged in the practice of law. All investment strategies have the potential for profit or loss.