Fiduciary [fi-doo-shee-er-ee]: A person to whom property or power is entrusted for the benefit of another. Surveys regularly indicate that few investors understand the concept of fiduciary obligation, and most believe their financial advisor is already required to act in their best interests. I suspect that most investors are not aware that in April of this year, the Department of Labor’s (DOL) long-awaited fiduciary rule became law. Although the six-year fiduciary debate might remain a mystery to you, what is essential to understand is that while the new rule is relatively complicated, the objective is simple; to make sure that those in the financial services industry act as fiduciaries. We, as financial advisors, MUST, by law, act solely in the best interest of our clients when giving retirement planning advice or pay steep consequences. In other words, you, the investor, come first!

I believe that financial advisors will look back on 2016 as the year that our jobs got somewhat more difficult, and I could not be more pleased! While some financial institutions expressed serious concerns about its impact on investors while the rule was being developed, I put forth that it will transform the financial services industry in an incredibly positive way for all interested parties, the client, the advisor and the profession. I have argued for years that what investors crave most is transparency. For instance, far too many investors do not realize how much they are paying for investment advice and strategy implementation, as they are either too intimidated to ask or that the fees are repeatedly buried in the fine print. The DOL rule is intended to ensure that you, as an investor, can be confident that the advice you are receiving related to the investments in your retirement account is not just suitable for you, but always in your best interests, that it is not influenced by other factors, and that you fully understand the costs associated with your investments.

One caution to the new fiduciary rule is that it only applies to your tax-advantaged retirement accounts and does not pertain to your taxable investment accounts. However, the SEC, which governs non-taxable accounts, is in the process of developing a fiduciary standard that would align with the Department of Labor rule and apply to a broader range of investments.

In the end, the fiduciary rule, which transforms the way the financial industry delivers retirement savings advice, is a great victory for retirement savers. In other words, your interest comes first! Many marketing slogans might imply that clients' interests come first, but this new rule goes well beyond advertising catchphrases; it is now the law"!