In April of this year, the Department of Labor (DOL) issued its much anticipated final rules that impose, among other things, fiduciary duties on advisors who recommend investments for all retirement plans, including Individual Retirement Accounts (IRAs). When the rule first came out, many in the industry wondered why IRAs were coming under greater scrutiny. It makes perfect sense when you think about how the retirement savings landscape has changed. As defined contribution plans (401(k) and 403(b) accounts) have replaced defined benefit plans (pensions), the responsibility to save for retirement has shifted from the employer to the employee. Since many Americans roll over their retirement plans to IRAs, it’s only right that the DOL put a policy in place to regulate and protect all retirement accounts. With these rules come greater transparency, meaningful disclosures and the elimination of many conflicts of interest. This will benefit the consumer and, hopefully, provide more accountability as advisors clearly communicate what they are charging clients and what services they are providing for those fees. Acting in the client’s best interest will no longer be optional.
For some advisors in the industry, shedding light on fees and providing more communication and justification for the advice and service they are providing could be intimidating. It will force them to drastically change the way they do business or might even cause them to leave the industry.
We applaud the steps the DOL has taken and view it as a plus for the industry and ultimately for the client. It doesn’t change the way we do business. It simply affirms what we have been doing all along, helping our clients pursue their retirement goals by providing clear and concise financial plans for a reasonable fee. Keeping the client’s best interest in mind – it’s no longer just the right thing to do, it’s the law.