In what ways will the DOL Rule effect accounts and those we work with?
As a refresher, there is a new fiduciary standard for all retirement accounts in effect. The Conflict of Interest Rule is another name that is being used for the latest Department of Labor ruling. With new changes there always comes some level of uncertainty.
There are two main objectives to the DOL’s conflict of interest rule:
- Duty of Care – do a good job
- Duty of Loyalty- need to be loyal to your client
If you’re interested in more information, get a detailed overview of the fiduciary rule.
As a fee-based advising team, our success depends upon achieving yours so you can trust that we have your best interest at heart. Considering that we are already fee-based and work in the best interest of our clients, there are few changes that will occur with our existing client base.
To help ensure we are compliant with the new fiduciary standard for retirement accounts, we are reviewing the following 5 areas:
- Investment Objective (IO) – to ensure we are acting as a fiduciary, which requires a deeper understanding of client objectives, beyond just risk tolerance and time horizon.
- Portfolio Design – to demonstrate that we use care, skill, prudence, and diligence in the portfolio design.
- Implementation – to provide a complete evaluation of potential investments
- Documentation – to have detailed documentation of why our advisors made recommendations that he/she did
- Review IRA Accounts at least annually – to provide a thorough review of the IO and portfolio design to make sure both are in alignment to support achievement of the portfolio’s goals. Regardless of if no changes are needed or the recommendations were not implemented, we must provide a written record.
Again our clients will see little to no change, but we are still including additional steps in our internal process to make sure we are providing a detailed and high level explanation for each unique account and putting our best foot forward for the ruling.