Department of Labor Final Fiduciary Rule

Posted on May 10, 2016 · Posted in Fiduciary, Financial Planning

Your Interest Comes First!

In April, the Department of Labor (DOL) published new rules and regulations that financial advisors working with retirement accounts must adhere to. These new guidelines will help protect investors from conflicted advice and hidden fees. The most notable change is the extended protection of the fiduciary standard that requires firms to put their client’s best interests first.

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In response to the final ruling, The Certified Financial Planner Board of Standards, Inc. has published the following article to highlight how the Financial Planning Coalition worked with the DOL to protect both investors and advisors equally.

“On April 18, 2016, following the April 6th publication of the DOL’s final fiduciary rule, the Financial Planning Coalition shared with its constituents and stakeholders a summary of the significant changes made by the DOL in the Final Rule, noting that the DOL made significant improvements in the Final Rule, addressing many of the recommendations included in the Coalition’s comment letters and testimony.

The Financial Planning Coalition – comprised of Certified Financial Planner Board of Standards, Inc. (CFP Board), the Financial Planning Association® (FPA®) and the National Association of Personal Financial Advisors (NAPFA) – has been active in support of the DOL fiduciary rulemaking – seeking a final rule that both protected retirement investors and could be implemented by our stakeholders within their practices. We filed two comment letters, met with the DOL and Members of Congress, testified before the DOL, testified before a congressional committee, and participated, at the invitation of Secretary of Labor Tom Perez, in the release of the Final Rule on April 6, 2016. While we supported the DOL fiduciary rulemaking, the Coalition also suggested modifications, clarifications and changes that we believed would ensure and enhance protections for retirement investors and make the rule more operational across business models.

Basically, the Final Rule closes loopholes in a 40 year old rule to extend a fiduciary obligation to a wider range of financial advice related to tax-preferred retirement plans and assets. Under the Final Rule, financial advisors and institutions who provide advice to retirement plans and IRAs must provide advice in the customer’s best interest, avoid misleading statements, ensure their compensation is reasonable, and disclose to clients basic information about conflicts of interest and costs.

The fiduciary standard and disclosure requirements in the Final Rule are similar to requirements CFP Board has established for CFP® professionals when providing financial planning services. Because of this, the Coalition is confident that CFP® professionals can be leaders in embracing the fiduciary obligations embodied in the DOL’s Final Rule. The Coalition believes the Final Rule maintains core principles of a strong fiduciary standard while making important changes that address practical concerns raised by us and others.”

If you are interested in learning more about working with a fiduciary or what Shoreline Financial Advisors can do for you, please contact us.

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