A Note on the Department of Labor’s Fiduciary Rule


If you’ve been following the news the past several months, particularly the financial news, odds are you’ve heard the word “fiduciary” a few times. Specifically, the Department of Labor’s Fiduciary Rule has been the subject of much press. As the client of an advisor, friend of an advisor, or simply someone who likes to keep up with the financial landscape, it is important for you to know what this rule means. But the rule is also complex and in a state of flux, so we’d like to share this update from our July newsletter, in which WealthPoint President Brent Walker outlines the DOL’s Fiduciary Rule and how it may affect you:


It is very likely you have heard about the Department of Labor’s Fiduciary Rule that went into effect on June 9th because it has garnered a lot of press. What does it mean for investors? Simply put, it means anyone who provides investment products or advice needs to act in the best interest of the client. That means avoiding conflicts of interest. It means acting with skill and knowledge. It means doing due diligence on investments. It means reasonable fees.

The brokerage and insurance industries have aggressively fought the rule, saying it will increase their liability and cost. Based on this industry lobbying, House Republicans and President Trump want to scrap it to “reduce regulations” but have been unsuccessful so far.

My question is this: why is there such a debate over doing what is in a client’s best interest? Shouldn’t that be a given? As a Registered Investment Advisor, WealthPoint has always had a fiduciary duty to act in the best interest of a client. Brokerage firms, employees of brokerage firms, and insurance agents have not. We learned in 2008-2009 that Wall Street is not our friend and about the conflict of interest that their proprietary products can create, in that case, subprime mortgage-backed securities. There are certainly good brokers who are ethical and work on behalf of their clients. But there is no requirement that they do so, only that the investment is “suitable”. And the new rule only applies to retirement accounts (IRAs, 401ks, etc.). It does not apply to taxable brokerage accounts. This makes absolutely no sense. Why is retirement account money more important than after-tax money?

So why does this matter? Well, as you can see the rules are different for a broker, insurance agent, or investment advisor. This law is an attempt to hold all to the same standard. The real issue is that most investors assume we all play by the same rules, and that can lead to problems when the rules are different. Selling products is fine and could be totally appropriate, but it should not be confused with or disguised as real advice.

These new rules have created a great deal of public awareness about the importance of fiduciary advice, which is a good thing for the investment public. Is also very good for WealthPoint because we are full-time fiduciaries, and always have been. We get paid directly by our clients, not by investment products.


Well said by Brent, so I’ll just leave you with one more thing. If you are curious about the difference between a fiduciary and a broker, scroll down just a bit to check out a video that will shed some light on the topic.

About the Author: Josh Bentz

Josh Bentz, CFP®, Wealth Advisor, helps clients organize and simplify their financial lives by providing comprehensive, personal financial planning. As a Wealth Advisor, Josh provides comprehensive financial planning for clients. He enjoys getting to know individuals and families so he can give specific, meaningful advice. He believes in being a fiduciary and doing what is in the best interest of clients.