Weekly Insight: The Fiduciary Standard

This week we wanted to explain the biggest regulatory change to the financial advice industry in over 40 years. There has been a lot of noise in the media about the new rules, which are known as the “Fiduciary Standard.” The new regulations were issued by the Department of Labor (DOL) and are scheduled to begin taking effect in April of this year. The regulation would require ALL financial services providers to place their clients’ interests ahead of their own. This seems like a no-brainer. You might be asking yourself how anyone in the industry could think this is a bad idea.

Well, it turns out that some larger financial institutions aren’t too happy with this rule and are doing their best to fight it. Admittedly, it’s not easy to meet the DOL’s definition of a “fiduciary,” and it’s time-consuming to collect and maintain the proper documentation for each account. The final regulation is over 1,000 pages and even the FAQs that DOL published to clarify the rules are 24 pages long!

Surevest has been operating as a Fiduciary for our clients since we first opened our doors as a Registered Investment Advisor in 2002. We chose to build a firm that values personalized advice and relationships over delivering “scalable” generic advice to the masses via call centers. This has allowed us to tailor our recommendations to the specific needs of each client. For us, there was never a question of whose interest should be first. Our way of doing business has served us well over the past 15 years as our firm has grown considerably, thanks to many of you who have referred your friends and family.

The battle over the fiduciary standard will continue because the Trump administration has asked the DOL to delay implementation until the costs and effects of the proposed rules can be studied. Some consumer groups are upset by the delay and possible “watering down” of the regulations. I feel that the industry has already improved, regardless of the final regulation. Many firms have changed their practices to operate only as fiduciaries. I recently read an article that compared the impact of the fiduciary standard on financial services to that of Y2K on computing systems. Computers did not crash when digital calendars shifted to the year 2000, but most computing systems were far more robust due to the preparations.

In summary, we would like you to know as fiduciaries, we have always placed your interests first (and we always will). We are currently working on some exciting initiatives to improve our services and the value we deliver to each client. We hope to share some of these soon.

We thank you all for your continued support and loyalty as we look forward to a very promising 2017.
Best regards,

Robert J, Luna, AIF, CIMA

Robert has over 16 years of experience in managing assets for institutions, professional athletes, small business owners and high net worth investors. He is an alumnus of the Wharton School at the University of Pennsylvania graduating from the Wharton Advanced Management Program (AMP) and has been a Wharton Fellow since 2011.
Weekly Insight: The Fiduciary Standard was published: by
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