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The DOL Fiduciary Rule is dead. What now?

As was widely anticipated, the Department of Labor's fiduciary rule, or the requirement that advisors act in an investor's best interest when providing advice on retirement accounts, is dead. 

In March, the Fifth Circuit Court of Appeals struck down the Obama-era law on the grounds that the Department of Labor overstepped their authority in instituting it. In June, the deadline for the decision to be appealed to the Supreme Court passed with the DOL declining to defend the rule. So, where does that leave everyone?

I wrote in 2016 about what the new law would mean, and what it wouldn't mean, for individual investors. Because the rule only covered actual retirement accounts (IRAs, 401ks, 403bs and the like), investors would still be on their own to ensure they were being given advice that was based on their best interests at all times, not just in specific situations covered by the rule. Still, it was certainly a step in the right direction. 

The industry had been in the middle of implementing the rule before the November 2016 election threw its future into doubt. The public has been coming around to the idea of asking for clarity around compensation, and ultimately I think the industry won't entirely abandon some of the changes to compensation models that have already been made. To be sure, a fiduciary standard - or really, any regulation - can't guarantee that an advisor will be honest, or competent. And plenty of brokers do a great job for their clients under a commission model! But what the spirit of rule did was increase transparency and give the client the ability to make an informed decision about how they wanted to be served.

Unfortunately, it is still on the consumer to make sure they know how the relationship is being defined: if you want advice that conforms to the fiduciary standard of being in the client's best interests at all times, you have to specifically ask. 


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