You may have read about the controversy over the Department of Labor’s (DOL) fiduciary rule that was released back in April.

Originally introduced by the Obama administration with the goal of issuing new protections for investors by addressing conflicts of interest residing within the retirement advice marketplace, the final rule broadens the definition of a fiduciary to include any advisor who offers counsel on 401(k) plans, IRAs, rollovers or distributions. Sounds complicated, huh?

While the extensive rule spans more than 1,000 pages and contains countless regulatory standards, the key takeaway for investors is actually quite straightforward: is your financial advisor a fiduciary, or not?

In the simplest terms, acting as a fiduciary means always acting in the best interest of your client. The new rule requires all financial advisors providing advice on any retirement account to act as fiduciaries to deter conflicts of interest in the advice they offer. The rule is also intended to reduce consumer ambiguity when searching for an appropriate partner to manage their financial future.

So, what does that mean to you, exactly?

The benefit of the fiduciary rule for consumers is that all advisors will be required to disclose information which they may not have previously.  In many instances, these additional disclosure requirements will add much needed transparency to the client-advisor relationship. In light of the new requirements of the fiduciary rule, we’ve provided a few questions to ask when vetting a potential or current financial advisor.

Does your firm offer any proprietary investments or products?

As mentioned above, one of the key functions of the fiduciary rule is to discourage self-dealing, conflict-of-interest fees. In the past, financial planners working for brokerage firms with their own mutual funds were able to push more profitable, proprietary products over others, prioritizing their earnings over their client’s interests.

Once the rule is fully implemented in January 2018, advisors will be required to clearly and prominently disclose any conflicts of interest, such as hidden fees or backdoor payments, for any retirement plan recommendation they make.

To avoid headaches in the meantime, we suggest that investors ask potential advisors if they offer any proprietary products or investments during the evaluation process. This will help clarify whether the investment services being offered are truly in your best interest.

How are you compensated?

In addition to understanding a firm’s product and investment offering, it’s also important to understand how they are compensated. Does the firm charge a flat fee for financial planning and investment advice? Or, do they work off commissions? What is the frequency in which they are compensated?

Unfortunately, some investors, especially wealthy investors, may have been treated unfairly by their advisors in the past—being steered toward products that didn’t support their goals and finding out about misleading or hidden fees after transactions have taken place, and only if they reviewed their statements very closely.

Under the fiduciary rule, brokers will be required to disclose fees at the very beginning of a partnership, making it easier for investors to understand the cost of the product or services they will receive.

How does your service fee compare to your competitors?

Just like any other purchase decision, make sure you compare a potential firm’s fees to the fees of similar firms. For example, we’ve seen instances where clients have been charged a fee 3 times that of another client in a similar situation, for the same level of service.

The new rule has a focus on price parity which discourages advisors from charging premium pricing for non-premium services. Once an advisor discloses how they are compensated, make sure to ask what services are included to ensure that the fee measures up to the service provided.


Waldron Private Wealth has always operated as a fiduciary, and we pride ourselves on our commitment to providing independent, conflict-free investment advice to our clients. We have no proprietary products to sell and provide our clients with a fee structure that’s easy to understand. The Department of Labor made headlines by taking a proactive approach to creating cost and service transparency for the consumer, but the industry has a long way to go.  Make sure the partner you choose is always on your side. A sense of trust, honesty and the complete absence of a conflict of interest should always be part of the offering.

Casey Robinson, CFP®

Wealth Counselor

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