What is an Investment Fiduciary?
There has been quite a bit of attention given in the last couple of years to the Investment Fiduciary Standard. This has been confusing for consumers and many financial professionals, and there is still no clear answer on how the Fiduciary Standard will shake out. What we can tell you is that an investment fiduciary is a financial professional who is legally bound to act in the best interest of their clients. The challenge is that, unfortunately, there have been people who have not acted in their clients’ best interests. It’s also not always transparent which financial professionals act as fiduciaries.
Despite all the upheaval, the regulatory changes around the Fiduciary Standard have little impact on our clients and their accounts. At Evergreen Wealth Managers, Mike has always acted as a fiduciary, making decisions in our clients’ best interests. We work together to develop a financial plan to meet their goals whether the goal is to purchase a new home, fund college for children or grandchildren, retire, or fund other life events.
The Background for Investment Fiduciary Rule
In 2016 the Department of Labor (DOL) questioned the definition of investment fiduciary, redefined it, and potentially changing the industry for advisors and their clients. Fast forward to early 2018 and the U.S. Court of Appeals for the Fifth Circuit ruled that the department had overstepped its statutory boundaries. While we don’t know the ultimate outcome of what this means for the industry and individual investors, there is much speculation that the SEC is the governing body better positioned to implement a fiduciary standard in the industry and that they are likely to do so in a more comprehensive manner than the DOL.
What does all of this mean for you as a consumer?
The fiduciary standard means that as consumers you should have a greater awareness and understanding of what your financial advisor is doing on your behalf. If you don’t have a clear explanation, ask questions and if you don’t like the answer, it may be time to find a different financial advisor.
If you’re unsure if your financial advisor is following the fiduciary standard, request to see their ADV Form that has been filed with the SEC.
If you have questions about the investment fiduciary standard and how it applies to your accounts or simply want a second opinion, please contact us. We’re happy to help.