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Is Your Advisor a Fiduciary All of the Time?

Is Your Advisor a Fiduciary All of the Time?

advisorYou may have heard some news in the financial press about the so-called “Fiduciary Rule.” It is a new rule that is supposed to make sure that financial advisors always act in the best interest of their clients when providing financial advice. It might be surprising to you that we needed such a rule. I think that most people would expect that their advisor is acting in their best interest—but that isn’t always the case.

Basically, there are two types of financial advisors. There are the advisors who work for a bank, a brokerage firm, or an insurance company. These advisors have not been held to a fiduciary standard in the past, which means that they have only been required to make sure that their investment advice is “suitable” for their clients—in other words, they can put their interests before those of their clients. These advisors are often compensated by commissions on the financial products that you purchase through them.

advisorOn the other hand, there are the independent financial advisors who only work for their clients. Those advisors have always been held to a fiduciary standard, meaning that they must always act in their clients’ best interest.

New Rule Limited in Scope

The “Fiduciary Rule” was originally put forth by the Department of Labor under former President Obama. Initially, it was scheduled to be phased in from April 10, 2017, to January 1, 2018. However, after President Trump was elected, the implementation was delayed. For a while, it looked like the rule would not be implemented at all. However, the new administration ultimately allowed the rule to go into effect on June 9.

advisorWhile the rule is a step in the right direction, it’s limited in its scope, and it may be changed or revoked. At this point, the rule requires all advisors to provide fiduciary guidance for retirement accounts. This means that some advisors will be acting as fiduciaries in some situations but not in others.

We wanted to assure you that Rall Capital Management is, and always has been, a fiduciary advisor. We act in our clients’ best interest 100% of the time. We’ve always have been a fiduciary advisor—and not just because it’s required for independent advisors. We do it because it’s the right thing to do.

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