The DOL’s Fiduciary Rule Will Change Nothing (For Us, Anyway)

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Big changes are happening in virtually every sector of the federal government these days, with broad-ranging regulations being issued on everything from personal liberties to corporate taxation. Just this week, one of the most significant changes to regulation of the financial services industry in recent history was handed down by the Department of Labor. Long in the works, the “fiduciary rule” for retirement investment is intended to improve clarity and transparency for retail investors, obligating broker dealers, dual registrants (those with concurrent licenses to act as a fiduciary as well as a broker), and others to disclose the details behind their recommendations – including their rationale for their suggestions, as well as any associated costs. For many financial professionals, and indeed for some of the biggest firms in the industry, this rule is destined to bring about major shifts in their business models. Here at BFA Wealth Management, however, it’s nothing more than business as usual.

Many of the changes that industry experts are predicting for individual investors as well as financial professionals would essentially move more people on both sides of the equation toward concepts we built BFA Wealth Management around in the first place. While quotes in the press from folks at giant firms have likened this announcement by the DOL to the ringing of some sort of doomsday bell, we can’t help but wonder why it should seem like such an imposition to tell your clients why you are suggesting any given strategies, and what those strategies would cost to implement. Par for the course at our firm, this level of transparency is not being universally well-received by those accustomed to working with the “suitability standard,” a less restrictive rule previously observed by advisors other than true fiduciaries; that rule allowed many in the industry to recommend positions or products that met minimum criteria despite potentially not being the best option for the individuals involved. Of course, this nascent need to disclose any commissions or other potential conflicts of interest is likely to be an eye-opener for a lot of people, but again, for us it’s simply the way we’ve always done things. The fact that methods and practices we’ve employed since day one are now being introduced as law makes us that much more confident that our client-centric approach to fiduciary care is the standard every individual deserves.

Reading institutional objections to the government’s new fiduciary rules in the news, we see a lot of concern voiced about the potential impact on boutique wealth management firms like ours. When these objections are referenced in editorials, it seems that they are often framed by skepticism of their sincerity on the part of the pieces’ authors. Rather than point fingers or call names, we’d just like to reassure anyone who genuinely worries for the future of smaller firms. We appreciate that the big guys are looking out for us, but having operated under these terms all along – by design, simply because we believe it’s the right thing to do – we’re happy to say that the fiduciary standard isn’t just good for individual investors, it’s actually a great way to do business, too.

Under the new rule as written, firms have until January of 2018 to comply. If that sounds like a long time, maybe that’s because there’s a lot of catching up to be done out there. After all, not every financial services business was built from the ground up to act in the best interest of its clients above all else. There’s bound to be a bit of a learning curve. If you don’t feel like waiting that long to get a straightforward analysis of your financial situation, and a comprehensive plan developed exclusively for you, give BFA Wealth Management a call today. Let’s talk.