It's official: President Trump is delaying the U.S. Department of Labor's planned fiduciary rule . Originally slated to begin implementation on April 10 and expected to have affected more than $3 trillion of retirement assets in the United States, the rule — crafted under the former Obama administration — would have required financial advisors and brokers to act in the best interests of their clients when dealing with retirement accounts.
That regulation would have affected investors' retirement accounts and the relationships they share with their advisors. It wouldn't have affected non-retirement accounts.
It's traditional for incoming presidents from opposing political parties to try to undo what their predecessors did in office and Trump has been no exception. To that point, one of Trump's top Wall Street supporters, Anthony Scaramucci, managing partner of SkyBridge Capital, promised throughout the 2016 campaign that Trump would rip up a Labor Department investment advice rule once he took office.
Despite all the debate around the rule, however, the Labor Department had made it clear that it was moving forward with the fiduciary rule.
Knut Rostad, co-founder and president of the Institute for the Fiduciary Standard and supporter of the proposed regulation, said in a statement that Trump's move was "both deeply disappointing and entirely expected."
However, the pause in rule implementation "brings a new opportunity for fiduciary advocates to rethink strategies in line with how dramatically the positions of the field have shifted," he added. "We need to remake messages to better challenge dubious or misleading or plainly wrong statements about the DOL rule."
Should the rule ever become effective, all financial advisors will be required to recommend what is in the best interests of clients when they offer guidance on 401(k) plan assets, individual retirement accounts or other qualified funds saved for retirement.
It's for that reason that certified financial planners Peter Mallouk, president and chief investment officer of Creative Planning; Barry Glassman, founder and president of Glassman Wealth Services; and Tom Stringfellow, president, managing director, CIO and fund co-manager of Frost Investment, say they believe that it's important for investors to truly understand the importance of the regulation.
They urge investors to ask key questions of their advisors to ensure they have a fiduciary responsibility to put the clients' interest above their own financial gain when offering individual retirement advice.
These advisors stress the need for investors to find out how their advisor is compensated. To that point, many investors just don't realize how much they are paying in fees, so it's very important to understand exactly how advisors get paid.
Note: This story originally appeared on Dec. 19, 2016.
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