One of the largest legal changes to affect the financial advising industry in years is set to become law. The Fiduciary Rule has been the talk around water coolers at financial advisor offices for a while now but the average investor has likely never heard of it. Despite the rule’s lack of publicity, it will have a profound impact on the way investors work with their financial planning advisors and the way advisors provide financial management advice for their clients.
What Does “Fiduciary” Mean?
The word fiduciary describes a relationship involving trust especially with regard to the relationship between a trustee and a beneficiary. In the asset management and financial planning industries, a fiduciary describes the trust that must exist between a financial planning advisor and their clients. Investors must be assured that their financial advisor is working in their best interests and that they can be trusted to manage their assets and investments. While this may seem like common sense, financial advisors have never been required to act as a fiduciary. For Focus Financial and our advisors, acting as fiduciaries on our clients’ behalf has been a mainstay of our foundation since our inception in 1993.
The Fiduciary Rule in a Nutshell
Originally endorsed by former President Obama’s administration, the Fiduciary Rule requires registered investment advisors to operate with full transparency and always act in ways that avoid conflicts of interest. Financial planning advisors have a “duty to care” about their clients’ best interest and must consistently monitor their investments for long term success while overseeing their financial status in the present. This means that in the event of a job loss or other financial burdening experiences, advisors are required to provide financial planning services that serve their clients’ best interests in their current financial situation and future goals.
This is why an annual review meeting for clients is so important to the success of meeting your financial planning and retirement goals. It gives your advisor the opportunity to understand what changes – if any – have occurred in your situation, and advise you on where to make adjustments in your plan and investments to keep you on track to meet your goals.
Is Your Financial Planning Firm a Fiduciary?
For over two decades, Focus Financial’s team of independent financial advisors have acted as fiduciaries by always working in the best interests of our clients. While other asset management companies scramble to prepare for the Fiduciary Rule’s new guidelines, our team continues to provide the same transparent and credible financial planning services that have grown Focus Financial into a leading financial planning and wealth management company.