You may have heard that the Labor Department issued new regulations last week concerning retirement plans.  These rules brought light to an issue that has been ever-present in the investment industry but has been primarily misunderstood.

At the heart of the issue (and at the new regulations) is the standards investment advisors must abide by.  There are essentially two vastly different set of rules – a Fiduciary Standard and a Suitability Standard.  The result?  Not every financial professional is operating in your best interest.  Shocking I know – but it’s sadly the truth.  

Fiduciary Standard – the standard that applies to Registered Investment Advisors (registered with the SEC or states).  This is Windermere.  Under this standard, we are truly on the same team.  We are bound to provide advice, guidance, and investments that are 100% in your best interest and to avoid any and all conflicts of interest.  We are on your side.  We are on your team.  We are in complete alignment.  We have no hidden interests or agendas.  Your best interest is our sole focus and we are legally bound to act in your best interest at all times.  We wouldn’t have it any other way.

Suitability Standard – this standard applied to broker/dealers (called registered representatives), with many of these firms selling products such as annuities and mutual funds.  This standard required that they only confirm that advice and investments suit your needs (based on age, risk and return requirements, etc).  However, there was no requirement to align fully in your best interests.  As a result, these financial professionals could have been “playing for the opposing team,” recommending securities that would result in them receiving a larger commission or allowing them to meet a quote for a bonus, for instance. 

So what changed?  The new regulation requires all financial professionals to operate as fiduciaries as it applies to retirement accounts and the various investments within them.  This has leveled the playing field slightly and will result in more alignment.  However, we continue to believe that you deserve a fiduciary relationship for any and all aspects on your financial life. Afterall, given all the other factors and uncertainties you have to consider, why would you want to add “whose team are you on, anyways” to that list?