This article serves as an update of the U.S. Department of Labor’s (“DOL”) Fiduciary Rule which expands the definition of “investment advice fiduciary” under ERISA. This new rule went into effect on June 9, 2017. Many financial representatives and advisers have been concerned about the requirements of the new rule. However, I have been at ease during this process, because as a Certified Financial Planner/Practitioner, I have always followed these “new” rules and have already set myself to a higher standard. This is one benefit of working with a financial planner that holds the credentials of CFP®.
The DOL is requiring all individuals giving retirement investment advice to “act in the best interest of their clients.” All individuals who provide investment advice on retirement accounts are now required to adhere to ethical standards that are similar to the standards which CFP practitioners voluntarily hold themselves.
As a Certified Financial Planner, I have always:
- provided advice that reflects the care, skill, and diligence that a prudent person would use;
- provided advice based on the investment objectives, needs, and risk tolerance of my clients;
- received compensation that is reasonable in light of all the services provided to my clients; and
- informed my clients truthfully - avoiding any misleading statements.
A key element of these new regulations is the requirement to demonstrate an adviser is “working in the best interest of their client.” At AFMG, we have always conducted our business based upon serving the best interest of our clients. Although this is nothing new for us, we will be required to work through more government regulation, stringent evaluation and exhaustive documentation – essentially more paperwork!!! We now must prepare additional documentation in an effort to support investment decisions in order to validate that actions are taken in a client’s best interest.
While some financial representatives may be panicking with the impact of these new rules, I am proud to know that, for the last thirty years, I have conducted my business according to the higher standards and ethical requirements of the Certified Financial Planning Organization. It is important to understand these are not new standards for AFMG, and our company will continue to function in the best interest of all our clients.