So the question that begs to be asked: Is the fiduciary rule in jeopardy under President-elect Donald Trump?
The U.S. Department of Labor's new fiduciary rule is set to begin implementation on April 10 and is expected to affect more than $3 trillion of retirement assets in the United States. It requires financial advisors and brokers to act in the best interests of their clients when dealing with retirement accounts. That regulation will affect investors' retirement accounts and the relationships they share with their advisors.
It doesn't affect non-retirement accounts.
It's traditional for incoming presidents from opposing political parties to try to undo what their predecessors did in office. Trump will be no exception. To that point, one of Trump's top Wall Street supporters, Anthony Scaramucci, managing partner of SkyBridge Capital, promised that Trump would rip up a Labor Department investment advice rule once he takes office. That's why financial services industry experts believe the jury is still out about what may happen to the DOL regulation.
Despite all the debate around the rule, however, the Labor Department has made it clear that it is moving forward with the fiduciary rule.
When the rule becomes effective, all financial advisors will be required to recommend what is in the best interests of clients when they offer guidance on 401(k) plan assets, individual retirement accounts or other qualified funds saved for retirement.
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It's for that reason that certified financial planners Peter Mallouk, president and chief investment officer of Creative Planning; Barry Glassman, founder and president of Glassman Wealth Services; and Tom Stringfellow, president, managing director, CIO and fund co-manager of Frost Investment, say they believe that it's important for investors to truly understand the importance of the regulation.
They urge investors to ask key questions of their advisors to ensure they have a fiduciary responsibility to put the clients' interest above their own financial gain when offering individual retirement advice.
These advisors stress the need for investors to find out how their advisor is compensated. To that point, many investors just don't realize how much they are paying in fees, so it's very important to understand exactly how advisors get paid.
