On February 23, 2015, President Obama called on the Department of Labor (DOL) to update certain rules and regulations regarding the financial services industry.1 The new standards the DOL enacted are creating quite a stir among financial advisors, mainly because those standards could greatly affect how they do business.
Notice that I said “they” and not “we.” That’s because these new regulations will not have any effect on me, my practice, or my clients.
Because you may hear more about these new rules in the future, I’m writing this blog to let you know exactly what’s going on.
1. To put it simply, the core of the issue lies in the fact that traditionally, most advisors are not required to put their clients’ interests first.
Read that again: most advisors are not required to put their clients’ interests first.
2. For years, most advisors have been required to follow a simple suitability standard. This means they are only expected to make recommendations that are considered “suitable” for their clients. To put it bluntly, this allows advisors to give advice that is primarily in his or her best interest, and not the client’s best interest, as long as that advice can still be technically considered “suitable.”
3. There’s another, higher standard that some advisors hold to. It’s called the fiduciary standard. Advisors who are fiduciaries must put their clients’ interests before their own. Even if the advice an advisor gives is less good for the advisor, they must give it if that’s what is best for the clients they serve.
Under the new rules, any financial advisor who provides advice pertaining to retirement savings, qualified plans, or IRAs will be classified as a fiduciary.2 That means many advisors who previously followed the “suitability standard” must now make a major change in how they do business.
So what does all of this mean for me? The answer is:
Absolutely nothing.
You see, we at Campbell Wealth Advisors have been following the fiduciary standard for years. We’ve always put our clients’ interests first. There are three reasons for this:
One, because we know the only way we can be successful is if our clients are successful.
Second, because our greatest passion is helping people work toward their financial goals, and we believe acting as fiduciaries is the best way to do it.
Third, and most importantly, we’ve always acted as fiduciaries because we believe it’s just the right thing to do.
So for us, it’s business as usual. We don’t expect to make any changes in how we take care of your client’s retirement accounts, and we don’t expect them to have to make any changes either.
Of course, if you have any questions about the fiduciary standard, or the DOL’s new regulations, please don’t hesitate to contact me stuart@campbellwa.com.
In the meantime, we’ll keep doing what we’ve always done: leaving no stone unturned in our effort to help our clients work toward their financial goals.
1 “Department of Labor Proposes Rule to Address Conflicts of Interest in Retirement Advice,” Department of Labor¸ accessed February 3, 2016 http://www.dol.gov/ebsa/newsroom/fsconflictsofinterest.html
2 Mark Cussen, “Proposed DoL Rules: How They’ll Impact Financial Advisors,” Investopedia, http://www.investopedia.com/articles/financial-advisors/111615/proposed-dol-rules-how-theyll-impact-financial-advisors.asp