The Department of Labor (DOL) Fiduciary Rule has been a popular topic of conversation in recent news but many consumers are still left with questions. These are the key things you need to know about the DOL Fiduciary Rule.

The DOL Rule was formed in April 2016 to ensure that fiduciaries act in the best interest of clients and put that interest above their own when offering retirement planning advice. The rule expands on the “investment advice fiduciary” section of Employee Retirement Income Security Act of 1974.1

Previously, Registered Investment Advisors and their representatives were considered fiduciaries for advising and held to the fiduciary standard. That standard enforces that they make decisions in the best interest of the client. Those who were not considered fiduciaries like insurance agents, brokers and planners were held to the suitability standard. The suitability standard ensured that the recommendation was appropriate as long as it met a defined need for the client.

What makes the DOL Rule different than previous legislation?

A new outcome stemming from the DOL Rule is who is considered a fiduciary. The rule extends to anyone who is offering financial consulting advice concerning retirement accounts and is getting paid for it. Professionals working with retirement plans or offering retirement advice will now be lifted up to the label of fiduciary and have to follow the fiduciary standard. This means it could extend to include brokers, planners and insurance providers.2

The DOL rule requires that the exact fees and commision will be disclosed to the client. It also requires that possible conflicts of interest cannot be concealed from the client. Once the rule is in effect, advisors that want to continue working on commission will need to have clients sign a Best Interest Contract Exemption, in situations where a conflict of interest could occur.3 There is speculation that this aspect of the rule may dissolve commission outlines within companies altogether.4

Offering advice can be a broad topic which may leave some wondering what instances the new rule does and doesn’t cover. The new rule doesn’t cover the following three scenarios where advice is given: It is not considered financial advice when a customer calls a financial advisor and requests a specific product or investment. Second, an advisor offering education such as a general advice based on a person’s income is not considered financial advice. Lastly, discussing or seeking advice on accounts that use after-tax dollars or taxable transactional accounts is not covered because those accounts are not considered retirement plans even if they are set aside to do so.5

The new rule has received praise and criticism from all sides of the financial spectrum. Some say that the need for new regulation is long overdue and will help ensure the masses will be led accurately based on their retirement situation. Others speculate it will cause small retirement businesses to close or that advisors will only pretend to change their approach. No matter the opinion, this new rule is extremely important to be aware of when planning out retirement with professionals.

The rule went into partial effect on June 2017 but currently won’t be enforced until 2018 to allow companies time to prepare for the changes. The official date is still on the table and continues to be debated. The outcomes of the DOL Rule can be confusing for current retirement planning, so make sure to ask questions of your financial advisors and think about the choices that are right for your individual retirement situation.



1.DOL Fiduciary Rule Explained as of July 5th, 2017.” Web.

2 Breaking Down the Fiduciary Rule.” DOL Fiduciary Rule Explained as of July 5th, 2017. Web.

3 Breaking Down the Fiduciary Rule.” DOL Fiduciary Rule Explained as of July 5th, 2017. Para 3. Web.

4 DOL Fiduciary Rules – What Do They Mean for You?” Web.

5What Isn’t Covered. DOL Fiduciary Rule Explained as of July 5th, 2017. Web.


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