April 20, 2016
The U.S. Department of Labor released its long anticipated “fiduciary rule” on April 6, 2016. The rule requires brokers and financial advisers to put their clients' interests ahead of their own when recommending retirement investments, a higher standard than the prior requirement that brokers promote investments that are “suitable” for the client even if other, lower-cost alternatives exist. 

The new rule may cause advisory firms to attempt to move investors from commission-based accounts to fee-based accounts where fees are structured as a percentage of assets invested and based on the type of investment product sold. (Fee-based accounts are already subject to fiduciary standards).

The new rule also may lead investors to use discount brokerages or so-called “robo-advisors,” which are online investment accounts that use algorithms to help people create portfolios on the belief that these alternatives will be more affordable than working with a financial adviser.

To view the full alert, click here.