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New Department of Labor Fiduciary Rule

As of June 9th, 2017, all financial advisers will be required to recommend what is in the best interest of clients when offering guidance on 401(k) accounts, Individual Retirement Accounts, or other qualified monies saved for retirement. In addition, advisors are no longer able to charge more than a reasonable compensation, and are not allowed to make any misleading statements.

The new fiduciary rule means good news for clients of financial advisors everywhere. Before the rule came into play, advisors everywhere were not obligated to do what is in the best interest of their clients. In the past, broker dealers, insurance salespersons, and advisors operating under the ‘suitability standard” were merely required to ensure that investments were suitable for a client at the time of investing.

Heller Wealth Management has always been an SEC Registered Investment Advisor that is a Fiduciary. When I myself tried to explain the difference between a Fiduciary and Non-Fiduciary acting under the suitability rules, most potential clients had no idea that all Financial Advisors did not actually have to act in the best interest of clients. They believed they were already receiving “Fiduciary” advice from their current advisor.

Why did this take so long? Why does this only apply to retirement accounts? Should clients care about these changes?  

There are half a million brokers who earn commissions. The government estimates that consumers lost $17 billion a year to conflicting investment advice in the recommendations made by brokers posing as advisors related to retirement plans. However, they also made a lot of money for financial institutions that were in no rush to change this.

So, does this mean that insurance salespeople will no longer be able to sell annuities for a fat commission? No, it doesn’t, but they will need to document why it is in the client’s best interest. This is called the BICE exemption.  

This has taken so long because big financial firms did not want to comply with Fiduciary Rules. My guess is so they would limit their financial exposure from litigation. It’ll be interesting to see what these institutions are going to do now. Some have said they will no longer allow commission products to be sold. Stay tuned.

I did not understand why this will only apply to Retirement Accounts (Could this have been a comprise to get the new rule passed?). I believe every Financial Advisor should have to act as a Fiduciary. This would further minimize clients being misled.

Will investors understand how the new Fiduciary Rule works and not haphazardly agree to a BICE exception? Only time will tell.

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Larry Heller, Not Your Average Advisor.


A CFP® (Certified Financial Planner) and a former CPA.

Has helped solve complex financial planning for 20+ yrs.

Member of Wealth Management Think Tank.

A financial advisor think tank that meets monthly to discuss investment strategies and planning opportunities.

Larry is approached regularly by the respected journals.

“Journal of Financial Planning”, and “The Wall Street Journal”.