Today – April 10, 2017 – is the date our industry has had circled on its calendar for months. It was supposed to be the day that the new “DOL Fiduciary Rule” went into effect. Instead, this rule has been delayed by the Trump Administration (to June 9, 2017), as they give further consideration to the rule and its impact on both investors and the investment industry. While this rule and this delay has caused confusion for many, we hope this special update can give you – our valued clients and friends – some clarity.
Simply put, as a Registered Investment Advisor, Madison Park Capital Advisors is already held legally to the fiduciary standard. Just as importantly, it is the only way that we professionally and personally desire to operate. Your interests before our own – always.
For some context on all of this, let’s look briefly at the history and the nature of the debate. For years now, a fierce debate has been ongoing in Washington, D.C. with regard to the “fiduciary standard.” In particular, the Department of Labor (DOL) has been formulating a rule that would require any advice given on retirement assets (IRA, pensions, annuities, 401(k), etc) to be given under the standards of fiduciary guidance – meaning the investor’s interest must always be placed ahead of anything else. Historically, some brokers have been held to what many consider to be a lesser bar – the “suitability standard.” The suitability standard simply states that the recommendation must be “suitable to the client’s personal situation.” While this recommendation may in fact be in the client’s best interest, it may also fall short of this bar, and instead result in an investment that lines the pockets of the broker at the unnecessary expense of the investor. The DOL seeks to change this as it applies to retirement accounts (non-retirement assets are not covered by this rule).
As the DOL continues to evaluate the rule, MPCA remains committed to putting the needs of our clients first (regardless of account type) and is fully prepared to be compliant with the rule in its current form, if and when it becomes applicable. As you might expect, the rule, as currently drafted, would create some additional layers of compliance (read: paperwork) surrounding certain areas of our business. However, it in no way impacts the nature of how we operate.
The same cannot be said for all firms in our industry. Some will be heavily impacted, and thus have been scrambling to adapt their business practices in order to comply with this new rule. What they do now that the ruling has been delayed and risks significant changes in the months ahead is anyone’s guess. If you have friends and colleagues who desire to be certain that all investment advice they receive is in their best interest, we invite you to share our information with them. Likewise, if you have any questions or concerns about this topic, please do not hesitate to contact us at any time.
Jeff, Chris, Andrew, & Bill