A new rule for many financial advisers: The customer comes first

Starting Friday, financial advisers who manage retirement accounts will be required by the Labor Department to act in the best interests of their clients.

"While we are disappointed that the Department of Labor has chosen not to further delay the rule until the department has completed a review of the entire rule's impact on investors, we appreciate Secretary Acosta's recognition of the rule's negative impact and his desire to seek public input", Bentsen said. In it, he told the federal agency to review the rule and prepare an updated economic and legal analysis. Notably, more participants may be motivated to keep their assets in the plan longer to benefit from institutional pricing. I like that my clients know I always put their best interests first when I'm working with their hard-earned money, and I take that responsibility seriously.

The fiduciary rule is a major step in the right direction when it comes to protecting investors, but the rule won't solve these problems on its own.

Advisers and fund managers who become fiduciaries after June 9th will need to abide by the Impartial Conduct Standards.

Give advice that is in the "best interest" of the retirement investor.

"...during the phased implementation period ending on January 1, 2018, the Department will not pursue claims against fiduciaries who are working diligently and in good faith to comply with the fiduciary duty rule and exemptions, or treat those fiduciaries as being in violation of the fiduciary duty rule and exemptions".

Acting as a fiduciary means you're doing what's in the best interest of clients, said Tim Quillin, a partner with Aptus Financial in Little Rock.

"One fund gives literally an entire asset allocation based on retirement year and exposure to all USA, global stock and bond markets", Gutierrez said.

"What the fiduciary rule is trying to do is curb some of the worst abuses in the financial services industry", Quillin said.

"More advisors have flat fees as part of their structure as they place more emphasis on service above and beyond the investment process", said Rob Cirrotti, head of retirement and investment solutions at Pershing LLC. In addition, up to 60 percent of those RIAs haven't made adequate investments in technology, such as basic as financial planning software.

The first stage of the fiduciary rule bars financial advisors managing retirement accounts from lying to or misleading clients and charging unreasonable rates.

You'll also want to find out how your advisor or broker is compensated, and in many cases it's not easy.

Be prepared to compare costs and services. In return, these advisors can legally receive higher commissions. You just need to ask one simple question: are you a fiduciary?

"These are men and women who turned to the federal government for help and got lost in an inefficient bureaucracy", said Rep. Bradley Byrne, R-Ala., the chairman of the subcommittee on workforce protections, during a May 23 hearing.

"There is a whole segment of the retirement industry who now only have to adhere to a much dramatically lower standard", said Scott Puritz, managing director with Rebalance IRA. "Send an email and request that the answer come back in writing". There are at least two fees for most financial products - the fee charged by the firm that manages the fund and the fee charged by the broker-dealer (Ameriprise, for example). Large and small firms started reinventing themselves and how they do business.

"Don't let your advisor take your money and move it to their account", said David J. Be sure that you and your advisor align on investment philosophy and that the advisor understands your goals.

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  • Zachary Reyes