The first quarter of this year was one of unexpected outcomes on several fronts in financial markets. Despite the overwhelming sense of foreboding that overtook equity markets in January and February leading to slides in stock prices and predictions of more in the wings, the broad equity market, as represented by the Russell 3000 index of the largest 3000 companies in the US, was up by approximately 1%. Interest rates which were expected to rise (again) unexpectedly fell.
DOL Fiduciary Rule
Another bit of big news around quarter end was the release of Department of Labor’s Fiduciary Rule. This rule pertains to “financial advisors” who work with retirement accounts (these include but are not limited to IRA, Roth IRA, 401k, 403b and 457 accounts) and requires them to act as fiduciaries.
Please be assured by the fact that Shoreline Financial Advisors is already a fiduciary and that we already comply with the new regulations in how we treat our clients. Further, we are a fiduciary for all of the accounts that we manage, not just retirement accounts. We have no issue with the new rule. In fact, we welcome it.
Among the requirements of being a fiduciary would be to place your interests ahead of our own. Another is to avoid conflicts of interest. Although these requirements seem obvious, most “advisors” who work with retirement accounts are actually salespeople subject to quotas and motivated by sales incentive programs and the related bonuses. In a recent survey by the Spectrum Group, 4 out of 5 Americans surveyed who work with a “financial advisor” thought that their advisor was a fiduciary. Unfortunately, only around a third of those surveyed actually were working with one.
Please be aware that the DOL Fiduciary Rule does not cover non-retirement or taxable accounts. We believe these distinctions are important and you can visit our website page at sfadvisors.com/working-with-a-fiduciary/ to learn more.
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