Find Out: How Does the DOL’s Fiduciary Rule Impact Me?

Let’s assume you have an IRA and your assets are being invested by a financial advisor. Your advisor notifies you he can no longer recommend investments for your IRA because he is not a financial fiduciary.

This means your advisor was actually a sales person who may have claimed to be a financial advisor to reduce your sales resistance. This tactic has been a legal business practice for decades, but it will be outlawed by the Department of Labor fiduciary rule that goes into effect April 2017.

Why do sales people claim to be financial advisors? In a recent Paladin Registry survey 86.3% of investors said they did not want sales people investing their assets – in particular, their all-important retirement assets.

What is the new DOL rule?

In the past, fiduciaries (financial advisors) and non-fiduciaries (sales people) could provide advice and recommendations for retirement assets (401k, IRA). In the future, only fiduciaries can provide financial advice for retirement assets.

Why is the DOL fiduciary rule important?

There are four reasons:


What about personal assets?

The DOL has no jurisdiction over assets that are held in non-retirement accounts. For example: Accounts for your children’s education, personal savings accounts, and trust accounts.

Why do you need protection?

Unfortunately, most investors do not know the critical differences between real financial advisors and sales people.

In the past, it has been easy to obscure these differences. Consequently, millions of Americans have unknowingly been advised by sales people who were not required to put their financial interests first.

It is imperative that advisors put your financial interests first when they recommend investments for assets that you will depend on during your retirement years.

Who are the sales professionals?

Sales people are licensed with broker/dealers. Their licenses (Series 6, Series 7) limit them to selling investment products for commission. The commissions are paid by the companies that manufacture the products – for example mutual fund companies.

These licenses do not permit them to provide financial advice or ongoing services for fees. And, because sales people are non-fiduciaries, they are held to a much lower ethical standard called “suitability”.

Who are the financial advisors?

Investment Advisor Representatives (professionals) are licensed with Registered Investment Advisors (firms). These registrations:

  • Permit them to provide financial advice and ongoing service for fees
  • Make them financial fiduciaries – higher ethical standards
  • Require them to practice full transparency
  • Require them to act in your best interest

Six Rules that will protect your personal assets:

The DOL will help you protect your assets in retirement plans (401ks) and IRAs. It is your responsibility to make the right decision for your personal assets. It is recommended that you adopt the DOL standard and exclusively coordinate with fiduciaries for assets that are held outside of your 401k and IRA.

Follow these six rules when you select a financial advisor.

  1. Registered Investment Advisor or Investment Advisor Representative
  2. The advisor is a financial fiduciary
  3. The advisor’s only or primary method of compensation is a fee
  4. The advisor practices full transparency for credentials and ethics
  5. The advisor’s business practices benefit you
  6. Trust what you see, not what you hear when you select an advisor


You still have to read the fine print before you sign an advisory service agreement. Watch out for a BICE (Best Interest Contract Exemption) Clause that allows an advisor to continue selling you investment products that pay commission.

Written by Jack Waymire | Founder, Paladin Research & Registry | A leading provider of information services to investors who rely on financial advisors.

Find Out: How Does the DOL’s Fiduciary Rule Impact Me?

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