In early April, the Department of Labor released its final version of its fiduciary rule for financial advisors. Under current law, financial advisors can choose to be held to one of two standards: the more lenient “suitability standard” or the higher “fiduciary standard.” In short, the DOL is beginning to require more financial advisors to hold themselves to the fiduciary standard.
I’m proud to say that Financial Synergies Wealth Advisors already voluntarily abides by the fiduciary standard for all clients and has since 1994. Fiduciaries are required by law to put the clients’ interests ahead of their own interests when making recommendations. This means that a fiduciary’s recommendations cannot be influenced by the amount or type of compensation that he or she is paid.
Unfortunately, many financial advisors are not held to the fiduciary standard and are only required to recommend “suitable” investments, a standard that can leave the door open for advisors to recommend mediocre investments that may pay above-average fees.
Even still, the DOL rules do not go into full effect until 2018, and they do not pertain to non-retirement brokerage accounts. While we consider the new ruling a big step in the right direction, we believe that the industry still has room to grow. Ideally all financial advisors would voluntarily hold themselves to the fiduciary standard.
Until then, rest assured that your advisors at Financial Synergies Wealth Advisors will continue to proudly accept the responsibility to serve our clients at the highest level as a fiduciary.
