Published by Taylor Financial Group
We have always known that being a great financial advisor means going far above and beyond just selecting investments and building portfolios.
Clients want to know that they are in good hands, and that they can confide in and trust their financial advisor to put their interests first. And they deserve that level of service! Sadly, not every financial advisor operates by these standards. But the new DOL Fiduciary Rule will now force financial advisors to “do the right thing” (or face penalties).
In April 2017, the new DOL Fiduciary Rule will go into effect, which basically means financial advisors will need to provide a minimum service standard to all IRA clients (not just their “best” clients). Since the term “minimum service standard” is left to interpretation, financial advisors will need to take measures to try to ensure that the minimum standard of care has been met.
What does this mean for you as an investor and a client?
1. Make sure your financial advisor is identifying and defining your investment objectives. If your financial advisor hasn’t reviewed your needs and goals with you, that’s a bad sign! If your financial advisor hasn’t ever explained to you what it means to have an investment objective, that’s an even worse sign! Identifying your investment objectives is the driving force to making suitable investment decisions for you. That brings me to my next point.
2. All of your investments in an IRA should be aligned to meet your investment objectives. Your financial advisor should be coordinating your investments in a way that supports your investment objectives. Essentially, your investments must reflect the best possible options given your needs and goals. This kind of investing requires a lot of research and work, such as assessing costs, considering long-term outlook and historical returns, and demonstrating disciplined management. Make sure your financial advisor is willing to do what it takes.
3. You should be receiving notes summarizing your meetings and discussions from your financial advisor. In our opinion, your financial advisor should be providing you with meeting notes for your records. We provide meeting notes to our clients after every meeting, and our goal is always to provide the notes within seven business days of their meeting. But many advisors don’t do that. If your financial advisor is not providing you with meeting notes, don’t be afraid to ask them to.
4. Meet (or speak) with your financial advisor at least once a year. Annual reviews (at a minimum) are necessary to make sure that your investment objectives haven’t changed and that your current investments are still effective to help pursue your goals. If your advisor is not reviewing your portfolio annually (at least), simply put, reconsider the relationship! If they are not giving you the opportunity to discuss your needs and goals, or how they may have changed since the last time you met, how can they possibly help you plan for your future?
It’s not just clients that need to become more prudent. Financial advisors, too, need to be wiser about the clients they are dealing with. At Taylor Financial Group, we meet with our clients periodically, usually more than annually, to ensure that we stay on track in working towards their goals. But, at times, we do run into some difficulties trying to keep clients engaged with attending meetings and otherwise. We have found that the clients who are “too busy” miss out on some of the additional services that we are able to provide for them. Undoubtedly, other advisors deal with the same issues. But, this new DOL Fiduciary Rule will also require us, as advisors, to become just as demanding of our clients as our clients should be of us.
The bottom line is, if your advisor is not doing all of the above, please consider reevaluating your professional relationship. It may be time to look for another advisor who is willing to be your fiduciary. In addition, if you have friends or family who you feel would benefit from our services, we are happy to meet with them to discuss how we can help.
If you have any questions or want to review your investment objectives, give us a call to schedule an appointment.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.
Securities offered through LPL Financial, Member FINRA/SIPC. Investment advisory services offered through CWM, LLC a Registered Investment Advisor. LPL Financial is under separate ownership from any other named entity.