U.S. LABOR DEPARTMENT ISSUES NEW RULES FOR RETIREMENT ADVICE
Q: The federal Labor Department this week issued new rules for retirement advice. Aren’t all “financial advisers” subject to the same rules or standards?
A:
No. Everybody wants — and many think they are receiving — “advice” based upon what is best (fiduciary standard) for them. However, much advice is based upon a suitability standard, with no requirement of full disclosure of conflicts or doing what’s best for the client.
Q: How will this affect investors and what should they look for?
A:
In theory your “advice” should be just that and not a veiled product sales pitch. You likely will receive notices/disclaimers from banks, brokers, insurance companies, 401k providers, etc., buried in the account documentation. It’s still buyer beware.
Q: What can I do to improve my chances of having a successful financial plan?
A:
Ask your “adviser” if they are a fiduciary. For example, all certified financial planners must act as a fiduciaries. If the adviser is a member of the Financial Planning Association, they are more likely to really be doing financial planning. Investment advice is only 1 of 6 parts of a comprehensive financial plan. The best advice is usually done in the context of your overall plan. Free or complimentary advice is a clue to ask more questions of the “adviser.” Visit www.dol.gov/ebsa for a fiduciary guide for consumers and www.cfp.net for a consumer guide to financial self defense.