Since it has been a major topic in the news of late we thought it was time for us to address the Department of Labor Conflict of Interest Rule. We have shied away from the topic for a few reasons; the primary, has been the slow development of direction. The recent change in administration has clouded the future of the rule and largely put the entire industry in a state of limbo. Whatever the outcome we wanted to take the time to explain the rule and the potential impact of it.
The DOL rule says that all advisors and registered representatives who manage retirement accounts are now considered to be fiduciaries, meaning they must act in the best interests of their clients, without any conflicts of interest, when providing savings and investment advice. The rule also prohibits fiduciaries from receiving any transaction based compensation involving the assets of a retirement plan or IRA unless there is an exemption.
Laurel Financial Group has been a Registered Investment Advisor since 1988 and, by definition, an RIA operates as a fiduciary for its clients. So, we have been functioning in this capacity for nearly thirty years. We believe the intent of the rule is well-meaning and consistent with the overall direction the financial services industry is heading. The rule is a significant step toward addressing conflicts of interest and providing more transparency of costs associated with financial advice. We hope that this aspect of the rule will weed out the advisors looking out for their pocket books, not their client’s best interests.
We will keep you informed as to the implementation of these and other rules and procedures.