Department of Labor (DOL) Fiduciary Standard Regulation Ruling Should be Embraced by Honest Financial Advisors
“Today, I’m calling on the Department of Labor to update the rules and requirements that retirement advisors put the best interests of their clients above their own financial interests. It’s a very simple principle: You want to give financial advice, you’ve got to put your client’s interests first” – President Barack Obama, February 23, 2015.
The Department of Labor recently finalized a change to the definition of “fiduciary” under ERISA that expands the scope of those who are fiduciaries. ERISA requires fiduciaries of pension plans to perform certain due diligence on service providers and plan investments. This legislation was needed due to many loopholes in the retirement advice rules, which allowed some brokers and other advisers to recommend products that put their own interests and profits ahead of their clients’ best interests. The new legislation helps to ensure that a Plan fiduciary is acting in the best interests of the Plan’s participants.
DirectAdvisors is currently acting in a 3(38) fiduciary (investment manager) capacity on all of our clients’ retirement plans. This ruling will not have an impact on our operations, processes, or procedures, as we already incorporate fiduciary best practices into our business model. Please read more on this new ruling in this CNBC article.