The recent announcement by the Department of Labor (DoL) establishing a Fiduciary Standard for retirement accounts is a watershed moment for consumers and professional advisors. The rule is a principles-based standard requiring advisors advising on retirement accounts (such as 401(k)s, 403(b)s and IRAs) to work in the best interests of their clients as opposed to their own profits. This means more low-expense investments and a whole lot less variable annuities and non-traded real estate investment trusts (REITs). Savings passed on to the consumer! Luckily for Lighthouse Financial Advisors and our clients, we have operated under the Fiduciary Standard since Day 1.
Most people are familiar with the Fiduciary Standard in their retirement plan at work. Now, the same standard is required when you leave your job and rollover retirement plan to an IRA. Wall Street and wirehouse brokerages have threatened to stop advising on retirement assets.
You are probably asking why the Fiduciary Standard is not required for all accounts. That is a great question; however, the DoL only regulates tax-advantaged savings/retirement accounts so they do not have the authority to implement changes to after-tax accounts. Hopefully the standard will one day apply to all investment accounts. Till then, the good news is LFA maintains the Fiduciary Standard for all accounts.
The DoL Rule is a seminal event and will impact the investment decisions and investment returns for individual investors for years to come.