What the DOL Ruling Means for Financial Advisors

January 12, 2017

While the Department Of Labor (DOL) ruling on fiduciaries remains in flux - will it get delayed, will it get repealed entirely by the Trump administration and how long would that take? - most firms are staying the course and making the changes needed to meet the fiduciary standard.


The DOL ruling is inherently a rule about accountability - You are required to act in the best interest of the client. What is in your client’s best interest is in your best interest. But now there is accountability.


In providing advice on investments, tax planning, distribution, and more, advisors have to know all of the options better than ever before. It is a process of education and then communicating that knowledge to the client.


Clarity is everything: If a client is confused, they will say no to a proposal. Those who offer financial advice now have to document that they explained all of the benefits and drawbacks of each recommendation they make. They will need to follow up with the client regarding these recommendations. Many firms will have to alter their process to build in accountability. Simply having good intentions is not enough.


The biggest impact of this ruling is for advisors of retirement accounts, especially regarding 401K rollover recommendations. Before the ruling, a financial advisor could recommend one option to you and attempt to convince you to do it without explaining the other options. Now, advisors must know the benefits and drawbacks of each option and communicate them clearly to their client. Should you do a 401K rollover? Keep it in the company plan?  Roll it over to a new employer’s plan? Do an in plan ROTH conversion? Do a lump sum distribution? What are the benefits and drawbacks for each option, considering your situation and needs?


If the Trump administration is successful in repealing the new DOL law, some argue that RIAs (such as our firm) will still benefit, as there is now more awareness for fiduciary responsibility, and RIAs (Registered Investment Advisors) have been putting their clients’ interests ahead of their own for decades. Others argue the public still may not know, but that we should strive to champion those who act in their client’s best interest.


We are a RIA firm based in Des Moines, Iowa that acts as a fiduciary - We seek to act in the best interest of our clients. If you would like to inquire more about our numerous financial services, you can call us at 515-557-1860 or email us at invest@taberasset.com.


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