Who Killed the Fiduciary Investor Protection Rule?

Read my special report entitled: “Is Your Financial Advisor a Fiduciary”   

The investor protection rule, known as the “DOL Fiduciary Rule”, which requires by law that financial professionals always put their clients’ interests ahead of their own has died. Banks and brokerage houses won, while independent financial advisors and individual retirement investors lost.

In April 2016, the DOL (Department of Labor) passed the fiduciary rule that required anyone who works with retirement accounts must be a fiduciary. That means all advisors would have to put their clients’ interest first. It was also referred to as the “conflict of interest rule” that said advisors must provide and give conflict-free advice on retirement accounts, thus putting their clients’ needs ahead of their own potential compensation. This meant that commissions on various investment products would have been regulated and more transparent.

Just last week, the courts decided to overrule the Obama era proposed rule, and eliminate it. The big supporters of this were the banks and brokerage houses, whose advisors are not fiduciaries and wanted their advisors to put the interest of their firms first, ahead of their clients. Very simply, most anyone employed by a bank or brokerage firm, regardless of their title, is not a fiduciary.

The way it stands now is that “brokers” must make recommendations that are “suitable.” This is far from the more stringent fiduciary standard. The DOL rule would have required all financial professionals, including planners, brokers, mutual funds and insurance agents to obey the higher standard when servicing their clients.

Ensure that your interests are always being put first. When you are seeking financial advice, ask the question: Are you a fiduciary? I am proud to say I am. However, I was genuinely surprised by how many are not.

Cheers -Keith Springer
916-925-8900

Smart Money Newsletter

Written By: Keith Springer

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