The Fiduciary Rules

Earlier this year, the U.S. Department of Labor enacted the first phase of new rules and regulations governing investment advice on retirement accounts.  This includes 401k's and IRA's along with other types of retirement plans.

Now, there is a strict set of rules for any registered representative who provides investment advice on these accounts.  One significant change is that the advisor now must act in a fiduciary capacity at all times.  A fiduciary is both legally and ethically bound by their actions and is legally required to put the client's interest first. (Think of a trustee on a legal trust, such as a living revocable trust.  That person is also a fiduciary/)

In theory, a registered representative should recommend only those investments that are the best option for a client, both in terms of suitability and cost.  Often this was adhered to as a principle of ethical planning.  Sometimes, unfortunately, this was not the case.  Now, it is a legal requirement.

Additionally, a new standard of certification is now available for those individuals providing investment advice on retirement accounts.  It is the Accredited Investment Fiduciary®.  The AIF® designation is awarded by the Center for Fiduciary Standards, a division of fi360.  It requires in-depth formal study, followed by a proctored exam and ongoing continuing education to maintain the certification.  The curriculum trains individuals in a structured process to organize, formalize, implement and monitor investment selection and portfolio design.  One of the key components for an  individual client is the Risk Tolerance questionnaire to create more suitable investment recommendations.

In anticipation of these changes, I earned the AIF® designation over two years ago.  This is in addition to my other certifications as a Certified Financial Planner® and Certified Wealth Strategist®.

It is still your responsibility to monitor your retirement accounts and meet with your financial advisor on a regular basis.  These new regulations may reduce costs and also help you to be more knowledgeable and informed when selecting and investment advisor.

Want to learn more?  Let's have a conversation.