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The fiduciary rule is set to greatly affect the way retirement accounts are managed, and in turn, perhaps how much investors see in returns.
Players throughout the financial services industry have been busy preparing themselves for the April deadline of the Department of Labor’s rule, which came out earlier this year and requires that advisers act in their clients’ best interests when overseeing retirement accounts. In the eyes of proponents, it’s a victory for retirement savers as its goal is to banish unnecessarily high fees and commissions, and provide more quality advice for those investing for their futures.
Critics, on the other hand, argue it will orphan small accounts too costly to manage and shut out a variety of investment options, instead focusing on passive choices like exchange-traded funds, which come at a much lower price point.
As part of the rule, clients might need to sign a best interests contract, which states they understand their broker-dealers, who are advisers that sell securities, might receive commissions on the products they recommend. It will also impact individual retirement account rollovers as accounts with too few assets might arguably pay more for less advice. Though there were concerns the rule would not go through under President-elect Donald Trump, it’s unlikely the future president will repeal it, experts said.
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Companies such as Merrill Lynch Wealth Management and J.P. Morgan Chase & Co. JPM, -0.62% have already announced they will stop charging commissions on retirement accounts. The former also said clients will only have the option of opening fee-based individual retirement accounts, as opposed to a percentage-based fee on total assets of a client’s account.
MarketWatch is going to interview Department of Labor assistant secretary Timothy Hauser and Marcia Wagner, an attorney and expert in labor law and fiduciary issues live on Facebook at 2 p.m. Eastern time on Thursday, Dec. 8. Certified Financial Planner professionals will earn a one-hour credit of continuing education after watching the session.
Have a question you’d like to ask them? Let us know your questions in the comments or email them to Alessandra Malito, and we’ll ask them during the live broadcast.
