The highly anticipated U.S. Department of Labor’s Conflict of Interest Rule was released on April 6th. Under the new rule, investment advisors providing retirement advice are required to serve as fiduciaries and place their clients’ interests ahead of their own. Financial Engines has long supported the rule, and in the weeks following the announcement, Financial Engines and other industry leaders, financial journalists, and industry analysts have delved into the rule.
The Wall Street Journal published an article highlighting reactions from several industry leaders, analysts, and politicians. Christopher Jones, Chief Investment Officer at Financial Engines, shared his point of view, stating:
“From what we have heard and read and the conversations we have had with the secretary and others, I think the [Labor] Department has made sincere efforts to streamline the original rule and make it easier for the industry to accommodate to the rule and minimize the unintended consequences and cost of complying. The core elements remain focused on making sure anybody who is providing advice in a retirement context does so as a fiduciary. We think that’s an unqualified win for the public and will ultimately benefit the industry, as it realigns to be more consumer-friendly.”
USA Today took a look at how consumers perceive the rule in a snapshot of the industry. The snapshot features a stat from our recent survey, which found that 77% of respondents support the idea that all financial advisors should be legally required to put their clients’ best interest first.
Bloomberg’s Katherine Chiglinsky writes that the rule is a vital turning point in protecting consumers in the investing process. She sites our survey finding that only “18 percent of adults were sure they knew what [fiduciary] meant in the context of investment advice.” Chiglinsky explains that the regulation will still allow brokers to collect commission, but the brokers will be required to adhere to the Conflict of Interest Rule, which will “hold more advisers to the tougher clients-come-first standard” and help eliminate some of the confusion around industry jargon.
With the rule now finalized, it is important to be educated on how it affects you. Questions? Check in with a financial professional to learn more.