Leave a Message

Thank you for your message. We will be in touch with you shortly.

The Fiduciary Rule Explained

fiduciary rismedia April 10, 2024

The Fiduciary Rule Explained

Asking a financial expert if they’re working in your best interest when giving you advice on your retirement account seems like a simple enough question. That question is now getting a little more complicated.

Known as the fiduciary rule and set by the Labor Department to take effect in April 2017 — but then delayed by the Trump administration until at least June 2017 and some parts until January 2018 — the rule simply requires people in the financial services industry to put consumers’ best interests ahead of their own.

Without this rule, financial advisers could steer clients to mutual funds with excessive fees or have other conflicts of interest such as higher bonuses or prizes. The Obama administration put the loss at $17 billion a year from retirement accounts for such conflicts.

The fiduciary rule would prohibit advisers from concealing any potential conflict of interest and required that all fees and commissions must be disclosed in dollar form to clients. It also expanded the definition of a financial adviser not just to someone giving ongoing advice, but to any professional making a recommendation or solicitation.

President Donald Trump has delayed the rule, which is now under review. Some groups have said they may sue the administration if the rule is weakened or killed.

The fiduciary rule is necessary, supporters say because most financial advisers aren’t held to a legal standard requiring them to put a client’s interests first — much like a doctor or lawyer must do.

Instead, financial advisers can legally act in their interests first and can earn bigger commissions for more expensive products that they sell. They can earn more by giving bad advice, and it’s legal.

To avoid this problem, consumers can look for “fee-only” advisers who charge a one-time fee for financial advice. They don’t earn a commission for steering customers into one investment product over another.

Before the rule was scheduled to be implemented, some investment firms had changed their prices on funds to appeal to consumers. Some high-fee products were removed and some companies eliminated commission-based sales practices entirely. Some also created new products that are less expensive for consumers.

If you work with a financial adviser, ask them if they’re a fiduciary and if they’re obligated to act in your interests above their own. If not, you may want to switch advisers.


Recent Blog Posts

Stay up to date on the latest real estate trends.

Room

Decorating Tips for Each Room of the Home

Do you ever wish someone would come in and tell you exactly what to do in every room of your house? Consider this guide your blueprint to doing just that. Read on for … Read more

bedroom decor

How and When to Refresh a Child's Bedroom

As your child grows and enters a new stage, you’ll need to make adjustments throughout your home to keep them safe, comfortable and happy. One of the most significant … Read more

zone

What to Consider When Creating a Homework Zone

With the beginning of the school year on the horizon, the to-do list is long. Back-to-school shopping for clothes, shoes and supplies, fresh haircuts, meeting the teac… Read more

Design

Creative Design Solutions to Cool Down Your Home

When the temperatures heat up, staying cool is top-of-mind. Cooling down your home can be possible with a few strategic interior design choices. From light-colored fab… Read more

Smart Home

Smart Home Technology to Cool Down at Home

During the dog days of summer, beating the heat can feel all-encompassing. With the help of home technology, you can cool your home down quickly and efficiently. Incor… Read more

pool

Pros and Cons of Installing an In-Ground Pool

A backyard, in-ground pool can make any day feel like a vacation. It’s the perfect spot to squeeze in some morning laps, cool down mid-week after work and lounge pools… Read more

Selling

How to Showcase Your Property When Selling During the Summer

No matter where you live, the summer selling market is hot. Sellers are trying to take advantage of an increased number of buyers, higher asking prices driven by the d… Read more

Vacation Home

Important Vacation Home Criteria to Consider

If you’re ready to invest in a vacation home, there are likely many locations to consider. Finding an area to focus on can be difficult if you don’t have a set locatio… Read more

Inspiration

How to Create a Light, Airy, and Summer-Inspired Space

Summer is both a season and a feeling. It’s a time that feels easier, more relaxed and all-around lightened up. Bringing that summer-inspired feeling into your home ca… Read more

Work With Us