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The U.S. Court of Appeals for the Fifth Circuit struck down the Department of Labor’s Fiduciary Rule, stating that it was “unreasonable’ that brokers handling investors’ retirement savings should be required to only act in clients’ best interest.
Unreasonable for advisors to only act in their clients’ best interests? Let that sink in for a moment…
In a nutshell: it’s still considered acceptable in the financial industry for advisors to give clients advice that is less than the best for the clients when it yields a higher commission for the broker.
In case you were wondering, the plaintiffs challenging the DOL’s Fiduciary Rule were the U.S. Chamber of Commerce, the Securities Industry and Financial Markets Association, the Financial Services Institute, Financial Services Roundtable, and Insured Retirement Institute. None of whom, clearly, are friends to the individual investor.
Because different Courts’ decisions have not been consistent about this Obama Administration effort to protect individual advisors, there is speculation the question will climb at some point to the Supreme Court , so this isn’t over. And while the Fiduciary Rule was not perfect, this is clearly worse.
Related: How to Simplify Your Financial Plan for a Happier You!
Meanwhile, what can you as an individual investor do to make sure your interests are not being sacrificed for the benefit of your advisor? Very simple: make sure your advisor is ALREADY a Fiduciary . And if they’re not, switch. Why leave your money in a big brokerage house where conflicts of interest and commissions potentially eat into your gains and your future? Or where – instead of being given the full picture – you’re being steered toward a product that isn’t the best possible choice for you because of brokers’ sales goals or “contests”?
Individual investors have the power to tell the industry that this is unacceptable by voting with their feet (or computers.) Choose an advisor who has sworn to uphold the Fiduciary Standard and ONLY recommend choices that are in your best interest.