{"id":1323,"date":"2018-07-24T09:02:15","date_gmt":"2018-07-24T14:02:15","guid":{"rendered":"https:\/\/www.rixtrema.com\/blog\/?p=1323"},"modified":"2020-02-22T06:22:49","modified_gmt":"2020-02-22T11:22:49","slug":"why-having-a-fiduciary-process-in-place-is-important","status":"publish","type":"post","link":"https:\/\/rixtrema.com\/blog\/why-having-a-fiduciary-process-in-place-is-important\/","title":{"rendered":"Why Having a Fiduciary Process In Place Is Important"},"content":{"rendered":"

We all have witnessed the ongoing battle in the DOL fiduciary rule process. The regulation was initially created under the Obama administration. However, in Feb. 2017, President Trump issued a memorandum that attempted to delay the rule’s implementation by 180 days. In late May 2017, newly appointed Labor Dept. Secretary Alexander Acosta confirmed that the fiduciary rule would not be delayed beyond June 9. Full implementation of all elements of the rule had been pushed back to July 1, 2019.<\/span><\/p>\n

Before that could happen \u2013 on March 15, 2018 \u2013 The Fifth Circuit Court of Appeals vacated the fiduciary rule in a 2-1 decision, saying it constituted “unreasonableness,” and that the Dept. of Labor’s implementation of the rule constitutes “an arbitrary and capricious exercise of administrative power.” The case had been initiatated and supported by The U.S. Chamber of Commerce, The Financial Services Institute and other parties. Finally, On June 21, 2018, the 5th Circuit Court of Appeals confirmed its decision to vacate the rule.<\/span><\/p>\n

What could have been<\/span><\/h4>\n

The fiduciary rule expanded the \u201cinvestment advice fiduciary\u201d definition under the Employee Retirement Income Security Act of 1974 (ERISA). It has changed the status of all financial professionals who work with retirement plans or provide retirement planning advice to the level of a fiduciary\u00a0 and it demands that retirement advisors act in the best interests of their clients and put their clients’ interests above their own. The fiduciary rule would set certain obligation for all advisors to state all fees and commissions for retirement plans and retirement planning advice which must be clearly disclosed in dollar form to clients. The definition was been expanded to include any professional making a recommendation or solicitation in this area and not simply giving ongoing advice. Previously, only advisors who were charging a fee for service on retirement plans were likely to be fiduciaries.<\/span><\/p>\n

The need for the rule<\/span><\/h4>\n

As a consumer I would argue that this is a great rule and I would love to have an advisor who would assure me that they are bound by it by acting in my best interest. If we look at the significance of being a fiduciary then it becomes clear how important this rule is for anyone who is looking for professional advice regarding financial matters. For example, these responsibilities include:<\/span><\/p>\n