21 Mar Our Continued Commitment to the Fiduciary Standard
You have likely read about the Executive Order that President Trump signed in the first week of February that mandated a review of the “fiduciary rule” scheduled to be implemented in April of this year. The “fiduciary rule” created after 5 ½ years of effort by the Department of Labor, holds brokers and financial advisers who work with tax-advantaged retirement savings to a fiduciary standard as opposed to the current suitability standard. Brokers who work under the suitability standard are only required to make recommendations that are suitable for their clients, not those that are in their best interest. Some brokers make recommendations that pay them the biggest commissions rather than those that are best for their clients, proponents of the rule say.
The fiduciary standard by contrast, mandates that recommendations be made as though the advisor is standing in the client’s shoes and are always in your best interest.
Given barely 2 months until the applicability date, it’s unclear whether they will be able to successfully delay the rule. Regardless, the following warning is timely and appropriate.
“The single most important thing investors can and should do is make sure they’re getting their advice from a fiduciary adviser, and not a salesperson masquerading as a financial adviser,” says Barbara Roper, director of investor protection at the Consumer Federation of America. “It’s really hard to do because they all market themselves as financial advisers; legally, they are salespersons, and they are fighting very hard for their right to profit at their customers’ expense.”
Additionally, investors should ask their advisers how they are paid, Ms. Roper says. She suggests asking whether advisers get paid more to recommend some products rather than others, why they believe a certain investment option is best and whether it is in the clients’ best interest.
The Henderson Group has always held itself to a fiduciary standard in all of our interactions with you, our clients. This is not a new way of doing business for us. This is the minimum standard to which we have always held ourselves and will continue to do so.