To Be or Not to Be – a Fiduciary?

Key Takeaways

  • The recent delay on the fiduciary rule has caused a lot of questions as to why this ruling matters.
  • Brokers and Registered Investment Advisors are different when it comes to retirement funds in that Brokers do not fall under the fiduciary rule, and Registered Investment Advisors do.
  • It’s important to know the difference between the two when you are picking an investment advisor, so please contact us if you have any questions.

There’s been a lot of questions out there about the Department of Labor and the fiduciary rule, so I want to address what this means and why it’s important.

In our financial planning world, there are Brokers and there are Registered Investment Advisors. Before we go further, for full disclosure, Coyle Financial Counsel is a Registered Investment Advisory firm held to the fiduciary rule standard. You might be asking yourself, “What’s the difference?”

A Broker is held to a suitability standard to place clients in suitable investments, meeting their goals and risk tolerance. Brokers are allowed to pick investments that pay more than the equivalent option. This piece is what the Department of Labor is saying is a conflict of interest, specifically for retirement funds only.

A Registered Investment Advisor is held to a fiduciary standard which requires them to put their client’s interests ahead of their own, and requires that investments are not only suitable, but can’t enrich the advisor at the client’s expense. The Department of Labor is looking at this fiduciary rule as being the standard for all retirement accounts, and a lot of large companies have had to look at their particular investments and at their advisors to determine if they meet this fiduciary rule standard.

There was an act that came out in the 1940s called The Investment Advisers Act of 1940 that laid out this whole fiduciary standard that has been adhered to by Registered Investment Advisors, so it’s been around and has been a tested standard for a long time. It’s just not something that has become an ubiquitous standard throughout the industry. It is something that we advocate for, as does the Department of Labor, because we feel that standard makes sense relative to the kind of advice that’s being given out to our clients and others out there.

There are about half a million advisors in the US, and they fall under either the Broker standard, or the Registered Investment Advisor standard. If this is all a little confusing to you, feel free to read this article, or you can also give us a call and we’ll walk you through the differences.

Until next time, enjoy!

Inertia, often caused by being overwhelmed, keeps smart people from planning. TransformingWealth™ , Coyle’s proprietary approach, is designed to get your arms around the big picture so you can make informed financial decisions. Take the first step to living the Good Life Managed Well™, and schedule a complimentary TransformingWealth Preview Meeting.


Gary Klaben is in our Glenview, IL office and serves our clients who are now located all over the country. He has over 30 years of experience and is the author of Changing the Conversation, The Wealth Sanctuary and co-author of The Business BattlefieldWhether advising his clients, mentoring his team, or coaching entrepreneurs, he is always simplifying complexity and motivating others to take the next action that’s right for them.

 

www.coylefinancial.com
800-480-7913 | coyle@coylefinancial.com

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