A Quick Summary of The Fiduciary Rule
The Department of Labor released their long-awaited fiduciary rule today and it is making serious waves in the investment world. The rule requires that all advisors giving advice on retirement accounts (IRAs, for instance) would need to act as fiduciaries. Being a fiduciary is a fancy, legal way of saying you must act in your client’s best interest. As it stands, financial advisors at brokerage firms have a weaker legal standard that does not require them to act in your best interest. This new rule would strengthen that standard. Note: at Endress Capital Management, we have always been required to act as a fiduciary for our clients, so this rule will not affect us.
Keep in mind that the purpose of the rule is to require that all advisors act in your best interest. Here are some reactions by various groups:
Endress Capital Management: We support the rule. Every advisor should legally have to act in your best interest.
Marketwatch: “Obama Administration Targets Financial Advisers Better At Enriching Themselves Than Clients”
USA TODAY (Opinion): “Hey, Investors: New Fiduciary Rule Has Your Back”
CNBC Headline: “Investors Come First In New Government Ruling”
Tony Robbins: Seems odd, but he has a really great, short video explaining this issue.
National Association of Insurance and Financial Advisors: Interview on NPR. Represents brokers. They are against the rule. Listen to the audio to hear their side.