So is this fiduciary rule going to happen or not? Brief recap: last year the Labor Department announced a rule requiring financial advisors to hold to a fiduciary standard when working with client’s retirement accounts. Donald Trump comes in and announces that his administration will relook at the rule and potentially canceling it. A few days later, a federal judge said the rule can proceed but it’s still uncertain if that will actually happen.
Financial advisors should act in the best interest of their clients. That’s not rocket science and so I do support the fiduciary rule. That doesn’t mean it’s perfect. If you want to see a summary of the problems the rule has, check out Cliff Asness’ (somewhat wonkish) article here.
The simple solution is for investors to work with a fiduciary now. We don’t need the Labor Department to make this happen, just awareness. Consumers can and should demand transparency in how their financial advisor is compensated and understand why certain financial strategies are recommended over others. But I hope that holding all financial professionals to a higher standard of care (as the fiduciary rule seeks to do) would elevate the financial planning profession to be more trusted by consumers. I also hope it eliminates the most egregious offenses of bad apples masquerading as “advisors” exploiting unsuspecting investors.