A new fiduciary rule has caused considerable confusion for consumers and their advisors, according to the Washington Post in "A new conflict-of-interest rule for retirement savers is causing a lot of confusion."
The Department of Labor set up a new rule on June 9 that says financial advisors who give investment advice to consumers about their retirement accounts, must act as fiduciaries of those consumers.
The easiest way to understand what the new rule means, is that advisors have to act in the best interests of the people they are advising. Investment advice must be based on the best thing for the saver, not the advisor.
Therefore, if an advisor would earn a higher fee from suggesting one investment rather than another, he or she cannot advise the saver on that basis. If the investment that pays the least to the advisor is better for the consumer, then that is the investment that must be recommended.
Many advisors are taking advantage of the new rule to make changes to how they manage retirement accounts.
The confusion surrounding the rule has given them the opportunity to make changes that customers may not like and place the blame for them on the new rule.
An estate planning attorney can advise you on any questions you may have about the new rule. Call (443) 470-3599 today and schedule a consultation with Maryland Attorney Britt L. Stouffer to learn more about Estate or Elder Law and how she can help you.
Reference: Washington Post (June 19, 2017) "A new conflict-of-interest rule for retirement savers is causing a lot of confusion."