Fiduciary Law Changes
This one probably passed by you without you ever noticing. We’ve had quite a few years of economic fluctuations since Covid. Market dips followed by radical returns only to dip again. A couple wars and some not so fun inflation. Your favorite restaurant may have closed like one of mine.
When all that is going on a bunch of laws get passed. Stimulus checks, PPP loans, and several Secure Acts. With these sometimes sneaky stuff gets put in the fine print that, when looked at a little more closely, proves potentially problematic.
One of these has to do with the long standing fiduciary rule and it may impact you and your trusted financial pro - and it might not be good. In short, a fiduciary is a person legally obligated to offer financial advice that is in your best interest and disclose any potential conflicts of interest in their recommendations. Makes sense but not all financial pros fall under this type of law and fiduciaries can offer products where no fiduciary responsibility exists.
Confused? Yup! Me too and I am a fiduciary financial advisor. Believe me when I say that just because a person gets paid for a recommendation does not mean they are a bad actor. Trust between you and whomever you get advice from trumps everything! And just because someone is a fiduciary doesn’t mean they are able to offer you the best tool for the financial job you need.
But what happens if the laws change and make it so everyone is under fiduciary rules? Pretty good and I applaud that.
What if the rules go further and say that only certain financial products are suitable recommendations, taking away your right to decide what to do with your money and what financial tools make the most sense for you?
When the rule came out it seemed good until you looked a little deeper at who sponsored the law. Certain types of financial firms argued towards their financial tools being the only thing that can be recommended - by law. Seems a little fishy to me. I wrote a longer article that you can see here if you want based on Politico writing “the 401(k) industry owns Congress.”
Since then, this particular fiduciary rule has been brought to court and stopped from being enacted in the fall of 2024. Again, certain financial firms fought against it because a different context makes their financial products suitable.
I bring this one to your attention because what you may be able to do with your money and what might be best could be decided by law and financial firms, not the relationship between you and your trusted financial professional.
Here are links to the original articles
https://www.politico.com/news/2024/04/13/how-your-401k-ate-the-federal-budget-00150319
As always, if you come across a financially related article you’d like to send my way please do!
Best place to send them is to me.
More next time!
Jonathan