New "Fiduciary Rule" Delayed....

[Tim Liston]

Last week, the Department of Labor (DOL) decided to delay the implementation of the new “fiduciary rule” which was conceived in 2016 and due to take effect this morning. Its implementation has now been delayed until June 9, and some think that by then it may be scuttled entirely.

The fiduciary rule would require investment advisors to act in a client’s best interest when dispensing financial advice. It’s hard to believe that’s not the way it's always been, but it’s not. Right now we have the “suitability standard,” which consumer advocates have long criticized for allowing investment advisors to provide conflicted advice, very often motivated by unnecessarily high fees paid to (yep!) the advisor. The present suitability rule permits investment advisors to sell high-cost financial products to clients and pocket very high fees, even when similar and much lower-cost products exist, so long as the high-cost product is deemed “suitable.”

Investing in today’s world is complicated. Not many people understand it well enough to manage their own money. Unknowledgeable investors don’t really realize that even a 1% annual fee and front-loaded investment options take a HUGE chunk out of one’s eventual proceeds, and are entirely unnecessary. Opacity is not your friend. The fiduciary rule would make it illegal to take advantage of clients. No wonder it’s in the process of being shelved….

I find this development to be particularly heinous. And I find it troubling (but not unexpected) that there's been virtually no mention of it in any widely-read media.

P.S. A lot of 401k plans, especially smaller plans are a GIANT rip-off. If you have one, and you don’t understand how it works, then you probably should learn, though you probably will be angered by what you discover….