New Fiduciary Guidelines for Financial Planners May be Published In September

For many, retiring as soon as possible is the primary goal of prudent financial planning. Engaging an experienced financial planner and taking advantage of their wisdom when it comes to navigating through a sea of 401k’s and IRA’s can be crucial.

However, revealing intimate financial details, and relying on an outside party to help plan one’s financial future can be dangerous. Over the past several decades, cases of fraud at every level have left people ruined. Even worse, it is entirely possible for an unscrupulous person to con people out of their money under the guise of financial planning without breaking any laws at all.

As a result, The Department of Labor (DoL) has begun the process of developing and hopefully releasing new fiduciary rulings. These rulings will define what kinds of activities a financial planner can engage with and will also define what responsibility a planner has to their client to ensure their financial success. The goal of these rulings is to provide a more specific guideline that will be less easily manipulated and keep future retirees safe.

Specifically, the DoL appears to be addressing guidelines related to the establishment of retirement plans. Right now, a financial advisor can look at a client based on their assets and assign them to certain portfolios of investments that are tailored for them specifically. New DoL rulings could impose greater fiduciary responsibility on discussions like this, making it difficult for someone to manipulate money out of an individual investing in something like an IRA that requires discussions about asset management.

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As things stand, Brad Campbell, counsel at Drinker Biddle in Washington D.C. believes that the regulations will be published sometime in the next two weeks so that they can be put into effect before the end of the Obama administration. However, it remains to be seen whether the DoL will be able to effectively define new fiduciary boundaries and meet that deadline. Regardless, these new guidelines will have a major impact on defining the role of a Financial Planner and providing another measure of protection to their clients.