Before you enroll, take note of what the insurance does not cover and the changes ahead. Misconceptions about Medicare coverage abound. Our national health insurance program provides seniors with some great benefits. Even so, traditional Medicare does not pay for dental care, vision care, or any real degree of long-term care. How about medicines? Again, it falls short.
[+] Full Article Save & Invest - Even if Money is Tight - 08/06/18
For millennials, today is the right time. If you are under 30, you have likely heard that now is the ideal time to save and invest. You know that the power of compound interest is on your side; you recognize the potential advantages of an early start.
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The Fiduciary Standard
May 3, 2017
What designations let you know that a financial professional will abide by this rule?
This year, the Department of Labor intends to introduce a new rule regarding retirement plan accounts, with full implementation envisioned by 2018. Under this new rule, financial professionals who consult retirement savers will be held to a fiduciary standard of care. In other words, they will have an ethical and legal obligation to always act in a client’s best interest.1,2
Many financial professionals already abide by a fiduciary standard. If the new fiduciary rule is implemented, even more will. In fact, the fiduciary standard may soon become the “new normal” within the financial services industry.
This rule has not always been so. Historically, investment professionals have been asked to uphold a suitability standard when making recommendations to their clients. Under the suitability standard, financial products are recommended considering a client’s age, income, net worth, and savings goals. Many in the brokerage industry believe this standard works well.2
The Department of Labor disagrees. In its view, the suitability standard leaves an open door for conflicts of interest to affect client-advisor relationships. In theory, many investments or products could be found suitable for an investor, and the one most recommended could be the one that results in the largest commission for the financial professional offering the advice.2,3
So, which financial services professionals uphold a fiduciary standard and emphasize fee-based or fee-only planning?
Registered Investment Advisers (RIAs) work by a fiduciary standard. They are regulated by the Securities and Exchange Commission and/or state securities authorities, and they charge their clients fees for many or all of the services they provide. Both individuals and firms can be RIAs.3
Certified Financial Planner™ practitioners also uphold a fiduciary standard. These individuals abide by the code of ethics and rules of conduct articulated by the Certified Financial Planner™ Board of Standards in Washington, D.C. They are directed to provide their financial planning services as fiduciaries.4
The Accredited Investment Fiduciary® designation is a gold standard within the industry. An AIF receives this designation from the Center for Fiduciary Studies only after thorough classroom study and an examination. The AIF curriculum emphasizes 22 “prudent investment practices” developed to help AIFs meet real-world fiduciary responsibilities. Some AIFs go a step further in their professional study and earn the AIFA® (Accredited Investment Fiduciary Analyst) designation, an even higher standard of excellence, which qualifies them to act as fiduciaries and provide financial consulting for large businesses and non-profits.5
Sometimes, the decades-old compensation structure of the financial services industry can impact even those financial professionals serving as fiduciaries. For example, a CFP® practitioner may sell financial products that provide commissions.6
In short, the financial services industry is not perfect. If the new rule demanding a fiduciary standard from professionals advising retirement accountholders is implemented, some of its imperfections could soon be remedied.
1 - kiplinger.com/article/retirement/T023-C032-S014-fiduciary-rule-in-limbo-but-investors-are-still-wi.html [3/20/17]
2 - cbsnews.com/news/merrill-lynchs-landmark-move-to-end-broker-commissions/ [10/17/16]
3 - investopedia.com/terms/r/ria.asp [3/20/17]
4 - cfp.net/about-cfp-board/ethics-enforcement [3/20/17]
5 - investopedia.com/articles/professionaleducation/07/aif-aifa.asp [3/20/17]
6 - nerdwallet.com/blog/investing/searching-for-financial-advisors-online-what-you-should-know/ [3/1/16]
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