New York (Reuters) – Tired of the on-again/off-again tease of a government rule that would make financial advisors act in your best interests? No need to wait.
You have all the tools you need right now to enforce your own fiduciary rule, simply by asking the right questions at the right time and voting with your feet.
The system that guides financial advice was supposed to change in April, when a long-debated set of instructions from the U.S. Labor Department to financial advisors finally became active.
These rules require any professional dispensing investment advice on retirement accounts to be what is known as a fiduciary, acting in a client's best interests instead of choosing the option that earns the most in commissions or fees.
New Rule In Limbo
Based on a memorandum that U.S. President Donald Trump signed two weeks ago, that process is now up in the air. The April start date might happen, a new rule might be offered, or we could just continue with the status quo.
The way it works today is that some financial advisors are fiduciaries and some are not, and often it is hard to tell the difference. An independent financial advisor with a certified financial planner designation? Yes, a fiduciary, by definition.
The person at your bank who tells you what funds to buy with your yearly IRA allocation? Probably not. The clerk at the call center for your 401(k)? It depends.
If the idea of unconflicted investment advice sounds good to you, then these are the key steps to follow to make sure you get it:
1. Know Your Advisor
Small investors do not often think it is worth their time or money to hire an investment advisor and develop a relationship (and neither do many advisors). But you can get to know an advisor quickly.
First question: Are you a fiduciary?