On June 9, the long-awaited fiduciary rule finally became effective. The rule requires financial advisors to put their clients’ best interests first when offering advice about retirement accounts like a 401(k). There is substantial confusion on the part of both investors and planners in understanding the scope of the rule. Some investors are becoming concerned with the changes their planners insist are due to the new standard, but seem arbitrary or outside the scope of the new fiduciary rules. Barbara Roper, director of investor protection for the Consumer Federation of America, sat down to answer some common questions regarding the rule. Roper explained that the rule, “applies to advice regarding Individual Retirement Accounts (both Roth and traditional), including rollover recommendations. It also applies to workplace retirement plans, such as 401(k)s and SEP and SIMPLE IRAs. Some 403(b) plans are also covered, but others, such as K-12 403(b)s, unfortunately are not. It does not apply to non-retirement accounts.” Roper also discusses how the rule generally works, necessary and unnecessary changes taken by advisors, and gives specific advice about different accounts and options for investors facing stubborn or dishonest planners.
See Michelle Singletary, A New Conflict-of-Interest Rule for Retirement Savers Is Causing a Lot of Confusion, The Washington Post, June 19, 2017.
Special thanks to Lewis Saret (Attorney, Washington, D.C.) for bringing this article to my attention.
