Note: This article is courtesy of Iris.xyz
By Rick Kahler
The Department of Labor’s groundbreaking new Fiduciary Rule may change the legal responsibilities of advisors who sell financial products for consumers’ retirement accounts.
Financial services industry pundits aren’t sure whether the new rule is a giant step in the right direction or a successful dodging of a bullet by Wall Street.
The original intent was to require those selling financial products for retirement plans to act as fiduciaries—advisors required to put clients’ interests ahead of their own.
One proposed provision was a “restricted asset list” which would have banned the sale of high-commission products like private REITs and annuities to IRAs and other retirement plans.
Wall Street brokers were “expecting a punch in the face that would force a dramatic overhaul of how they dealt with their customers,” notes Joshua Brown, CEO of Ritholtz Wealth Management, in an April 6 article at Fortune.com.
As adopted, the final rule allows financial salespeople to still sell all the controversial illiquid high-commissioned products they currently sell, as long as the brokerage firm can document the product is in the client’s best interest. Brown says this amounts to a “love tap.”
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