The Fiduciary Rule

Beanie Babies

Over the last week I’ve been asked by peers, friends, and clients for my take on the Department of Labor’s new Fiduciary Rule and the added level of regulation this puts on financial advisers.

For those of you not familiar with the rule, it basically states that any financial professional providing guidance on retirement assets (or planning) must act as a fiduciary. This means the adviser must put the client’s interest above their own.

One interesting part of this rule is that it only pertains to ‘retirement assets’.. But the reality is that retirement can be funded through many means without being in an IRA, 401(k), etc… A taxable brokerage account, money stuffed in a mattress, or your prized Beanie BabiesĀ collection can be used to fund a retirement lifestyle but are not included in this rule.

As far as my viewpoint is concerned, this doesn’t change things much. I’ve never needed a rule to know that acting in my clients’ best interest is the right way to do business. I don’t sell products that carry a commission (and the associated conflict of interest) and I don’t have selling agreements or soft-dollar benefits with any outside entity. This was the reason for emphasizing true independence when building the firm.

From a regulatory standpoint, I generally tend to oppose policies that are designed to “save the consumer” from ourselves, as it can become a slippery slope (Next it could be “Tesla should have never sold me this car I can’t afford.” etc ) But in this case, it may end up resulting in a better experience for some investors, which I support.

Nonetheless, until you build rapport with someone you trust, you have to be in charge of your situation and it’s important to properly vet anyone you’re working with. Here is an article with some good questions you should ask any prospective adviser.

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