One of the hot topics that have recently come into the public eye is whether or not you can trust your financial advisor. It turns out that depending on the title that your retirement advisor uses, they may or may not be working in your best interests.


What is a Financial Advisor?

As it turns out, anyone can call themselves a financial advisor. From large companies to small firms the title just means that it is someone who works with retirement accounts and investments.
In many cases, financial advisors are there not to help you decide what you should be investing in, but to sell you “financial products” that may or may not be in your best interests.

Your financial advisor may be paid commission from a certain mutual fund to have their clients invest. Their own company may incentivize them to obtain more investments in one fund or bond over another. This is all done for the best interest of the investment firm and the advisor. It may not always be what is right for you.

Many times you, the investor, will lose money on these “financial products.” There is no recourse for you to get your money back. Worse, there were no rules or laws that say financial advisors must work in the best interests of those they are advising. Until now.

 

The Role of a Fiduciary

Unlike a financial advisor, a fiduciary has a very particular function: to work with a person’s retirement accounts to help them get the best return possible. Instead of working on commission or percentages taken out of your retirement accounts, most fiduciaries work on a fee basis.

You pay them a fee for looking at your accounts, and they make a recommendation that would be, in their opinion, best for your situation. They are there to help you invest in a way that will get you the most return for the money that you have.

In short, someone who is doing business as a fiduciary must work in the best interests of their clients.

 

Department of Labor Rules

Since 2010, the Department of Labor has been working to bring financial advisors under the same set of standards that fiduciaries must abide by. In late June they passed a set of regulations that would force financial advisors to work in the best interests of their clients.

This rule was promptly taken to court. The Chamber of Commerce, as well as other industry groups, are trying to file suit in federal court to fight the regulations claiming it is an “undue burden.”

The issue with that claim is that doctors, lawyers and accountants must work in the best interests of their clients. Why are financial advisors not held to the same level of standards?

Stano Law Group can Help with Elder Law Issues

Do you need help recovering lost retirement money or have other elder law issues? Then contact Stano Law group today.