Build trust with clients and reduce the risk of lawsuits and regulatory challenges under the DoL Fiduciary Rule with Aprisi Assure.
On April 4, the U.S. Labor Department announced it was extending the applicability date for its controversial Fiduciary Rule. The Rule would require advisors to retirement investors to place their clients’ interests ahead of their own, and to charge no more than reasonable compensation for their services. As of this writing, the 60-day extension means the Rule will now take effect on June 9, 2017, instead of April 10. This will allow time for the Labor Department to review whether it would limit access to retirement information and advice
In the meantime, a number of opponents are pursuing lawsuits to kill the Rule completely. While rulings to date have generally favored the Fiduciary Rule, legal maneuvers will no doubt continue. But for many firms, it won’t matter – they’ve either already left the market, or already spent millions preparing for the original April 10 implementation date.
It may sound inconceivable, but I recently realized that as an employer and the trustee of my company 401(k) plan, I’m at risk of being sued by plan participants who are unhappy with their returns. I didn’t think this was even possible since I’m not the person responsible for managing the funds under management.
The relationship between financial advisors and their customers can be complicated. And just like any relationship, trust must be built between the two parties for the whole thing to work. Investors must trust that the advisor understands their situation and goals, has disclosed the rules of engagement, and is working in their best interest. The advisor trusts that the investor not only received but understands the disclosures associated with risks, terms, expenses, fees, and how returns are calculated. In general, consumers assume that the advisor is acting in a fiduciary manner – in their best interest – with a duty to disclose and a duty to ensure comprehension.