Client Alert

There is significant uncertainty regarding the implementation of the DOL Fiduciary Rule after the President signed an executive order on 2/3/17. While the initial wave of news reports reported that the order delayed the implementation of the rule, the final text of the order, which you can read by clicking here, appears to direct the Department of Labor to review the rule again (it has already been through a thorough review process), which may result in a delay of the implementation of the rule.

We believe that the effects of the Fiduciary Rule have already benefited our clients, and both We and SagePoint continue to operate under the assumption that the Rule will go into effect. Please click the green tab on the bottom right corner of the page to book an appointment to discuss how this change will impact you. We will continue to update this page as new information becomes available.

The new DOL Fiduciary Rule (“Rule”) is to ensure all investment recommendations financial advisors provide to clients are in the best interest of the clients. The Rule does this by broadening the definition of “Fiduciary” under ERISA to include investment advice given on all types of IRAs and ERISA employer-sponsored retirement plans.

A version of this Rule proposed in 2010 was unsuccessful, mainly due to the DOL’s attempt to eliminate the “commission-based” IRA. The new Rule addresses objections around this topic by allowing for “commission-based” IRAs as long as the advisor and firm complies with an extensive prohibited transaction exemption, known as the “Best Interest Contract Exemption (BICE).”

The Financial Advisor I Work with:
> The Rule does not require you to change your Financial Advisor. You can continue to work with your Financial Advisor and his/her staff.

The Services that I Receive:
> You will still be able to receive the same level of services currently provided to you by your Financial Advisor. The Rule requires a Financial Advisor to provide investment advice with care and prudence, and it must be based on your needs and objectives. The compensation earned in connection with this advice also has to be reasonable in light of the services provided.

The Investments I can Invest in:
> You will still be able to invest in any of the investment options the IRS currently allows within IRAs. Your Financial Advisor will be focusing on your needs and objectives when making investment recommendations for your IRA.

The IRA I Currently Have:
> The Rule does not require you to change/move your current IRA. You are encouraged to discuss with your Financial Advisor your needs and objectives and whether they have changed over time. If they have, your IRA may need to change/move to a different environment to address your personal situation. Your Financial Advisor is focused on helping you meet your retirement goals, and it is important for you to consider and discuss these matters.

The Contract I Have with my Financial Advisor:
> You may receive an amendment to your existing contract relating to the services provided by your Financial Advisor. This amendment is designed to meet certain conditions under the “Best Interest Contract Exemption,” which is an important part of the new Rule. The amendment will describe the new Fiduciary standards and provide other information relating to the services provided by your Financial Advisor.

— You may also receive and have access to some additional disclosures related to the fees associated with the investment recommendations your Financial Advisor provides you as well as the compensation your Financial Advisor and his/her Firm receives.