by: Kathleen Elkins
On Wednesday, the US Department of Labor announced a new fiduciary rule, which will require investment advisers to put client interests above their own when it comes to investment choices for retirement accounts.
“The DOL regulation attempts to ‘level the playing field’ for everyday investors who hold some $12 trillion in IRA and 401(k) plans when it comes to their dealings with financial advisers,” reports Business Insider’s Elena Holodny.
A 2015 report from the White House Council of Economic Advisers (CEA) estimated that fees and conflicted advice costs American middle-class families about $17 billion per year, and decreases annual returns on retirement savings by 1 percentage point — an effect the new rule is meant to mitigate.
Here’s how the new rule may affect you:
Your financial advisers are now subject to the fiduciary standard when it comes to overseeing retirement accounts
Before the rule, financial advisers were subject to a looser suitability standard when overseeing retirement accounts, meaning that they were obligated to recommend investments suitable for your situation. Now, brokers, registered investment advisers, insurance agents, or other types of advisers are subject to the fiduciary standard, meaning they must put your best interest first. Read More….