Duel over the Rule

Sheaff Brock investment advisors Indianapolis experienced money management

Duel over the Rule

“What’s it all about?” you may be asking, hearing the talking heads go on about the Department of Labor Fiduciary Rule. “The Rule,” debated for years, became official under President Obama, and was scheduled to be phased in starting April 10, 2017. The rule expands the “investment advice fiduciary” definition under Employee Retirement Income Security Act of 1974 (ERISA).  Meanwhile, a special memorandum issued by President Trump attempted to delay the rule’s implementation by 180 days so that the Rule can be re-evaluated. The administration wants to determine whether the DOL Fiduciary Rule might disrupt the investment industry, raise the price of advice, and leave small investors without advisers willing to serve their needs. Recently, the DOL has agreed to delay the implementation of the fiduciary rule until June 9, 2017.

Will the DOL Fiduciary Rule have any effect on your investment accounts? That depends…
Up until now, the financial salespersons, such as brokers, planners and insurance agents, who work with retirement accounts was accountable to the suitability standard. Suitability meant that, as long as an investment recommendation met the client’s defined need and objective, it was deemed appropriate.

In contrast, Sheaff Brock and other Registered Investment Advisors (fee-paid advisors), have already been subject to many of the standards in the much stricter DOL Fiduciary Rule, because they have already had a fiduciary responsibility to put your interests ahead of their own. Perhaps that doesn’t sound very different from the suitability standard, but the fiduciary rule leaves no room whatsoever for conflicts of interests, as Investopedia.com explains. All fees and commissions charged to your retirement account must be clearly revealed to you, the customer, in dollar figures.

Under the expanded “investment advice fiduciary” definition in the DOL Fiduciary Rule, all financial professionals, broker-dealers, their registered representatives as well as insurance companies and their agents who make recommendations to retirement plans, plan fiduciaries, beneficiaries and individual retirement accounts would be bound legally and ethically to meet the higher fiduciary responsibility standards in the new rule.

The new DOL Fiduciary Rule would apply not only to your:

  • 401(k) plan
  • ERISA-covered 403(b) plan
  • Employee Stock Ownership Plan (ESOP)
  • Simplified Employer Pension (SEP) plans
  • Savings Incentive Match Plan for Employees (SIMPLE IRA)
  • Defined benefit pension plan

But also to your IRA accounts (Traditional and Roth).

Sheaff Brock Chief Compliance Officer Audrey Kurzawa stated the firm will be ready whether the DOL Fiduciary Rule is allowed to take effect or not. Sheaff Brock has always operated as a “fee only” advisory firm, with no variable payment structure, no commissions, no “trails,” and no 12b-1 mutual fund fees.

“Our focus is on growing our clients’ assets based on their goals and risk tolerance,” Kurzawa points out.

Which, Sheaff Brock believes, is exactly as it should be.

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