Before we direct you to our latest investment newsletter, we want to give you some important news. The Department of Labor (DOL) has proposed the most important legislation to affect investment advice in history. This rule was created to force advisors to retirement plan assets (including IRAs) act in their clients’ best interest, as fiduciaries. In other words the new rule will make it illegal to work against a clients’ best interests. Currently advisors to investors are paid substantial commissions selling “risk-free” annuities and investments products and have many other ways to pick investors’ pockets.
Few investors understand the depth of the conflicts of interest. Many have been told by their advisor that he is “fee-based.” These investors are unaware that their advisor can be paid either fees or commissions and may be subject to multiple conflicts of interest. These Investors are currently misled to invest in insurance and investment products that are clearly in the best interest of the firms selling them but not in the clients’ best interest as might be measured by a prudent man.
The new DOL rule intends to eliminate conflicts of interest with all advisors to retirement plan assets. The rule strongly favors advisors like Global View, who are strictly fee-only and are paid only by their clients.
According the Consumer Federation of America, a similar law passed in the United Kingdom in 2012 had some important effects:
- Nearly 1/3 of financial advisors left the industry
- The quality of investment advice was improved
- There is no evidence that consumers were left without advice due to the regulation.
The reason this is important to you is that over the coming months you are going to see more invitations to investment lunches than ever. Banks and insurance companies will be hosting these investment lunches to “make hay while the sun shines,” or to get around the law.
With that in mind, the Securities Industry Financial Marketing Association (SIFMA), the American Council of Life Insurers (ACLI) will be filing suit against the DOL to stop this legislation.
American investors are tired of having their pockets picked. At Global View, we are fee-only fiduciaries adamantly educating professionals, our clients and prospective clients about the advantages this entails. Please give this some thought and think about passing this on to your friends.
