The second Tuesday of each month, practice managers and healthcare industry service providers gather at KraftCPA headquarters for the monthly Nashville Medical Group Management Association (NMGMA) meeting.
During the May luncheon, Jeanne Fisher, CPFA, CFP, MBA, a retirement plan specialist with ARGI Financial Group, spoke about the Department of Labor's Fiduciary Rule, it's implementation and implications.
The Fiduciary Rule was initially created under the Obama administration and aims to level the playing field among financial professionals who work with retirement plans or provide retirement planning advice and to create a uniform industry standard. The rule raises those who work with retirement plans and products to the level of fiduciary, which means they must meet the legal and ethical standards of that designation to act in the best interest of their clients, explained Fisher.
The Department of Labor (DOL) rule came about because of a belief that conflicted advice was widespread and was causing serious harm to IRA investors and those who trusted their advisors to work in their best financial interests even though the advisors weren't legally bound to do so. "Because of the way that the industry was, it was actually harming people," Fisher said of the rationale behind the new rule.
She explained conflicted advice is when an advisor accepts back-door payments, commissions or hidden fees to direct an individual toward a specific retirement product that might not be the best one suited to that person's interests. It raises the stakes from meeting a 'suitability' standard to a 'fiduciary' one.
The basic tenets of the new rule are that anyone providing investment recommendations must now be held to the higher standard and that fiduciaries must provide impartial advice in the client's best interests, could be held personally liable for advice rendered, and must enter into a contractual agreement with the client acknowledging their fiduciary status. Fisher said the rule comes with a heavy administrative burden.
Although originally slated to go into effect on April 10, 2017, the ruling has been delayed until June 9, 2017. However, many companies have already begun the process of overhauling their systems by investing time and money into advisor training, legal fees, disclosure documents and other steps to begin accommodating to the new, stricter regulations.
The ultimate goal of the rule is to ensure investors receive the best, most sound advice to meet their specific needs for the future.
For information on upcoming NMGMA events or to learn more about the association, go online to nmgma.com.