Financial Advisors No Longer Compelled to Use the Department of Labor’s Fiduciary Rule
REDW Wealth | June 28, 2018
A rule requiring financial advisors to act in their clients’ best interests with regard to retirement accounts has been ended by a U.S. court. The “fiduciary advice rule” made investment advice standards for retirement savings tougher, requiring investment professionals to put clients’ interests ahead of their own with regard to retirement accounts.
Many financial advisors and institutions made significant changes to their business practices following this rule. Various states have followed suit to develop regulations on investment advice provided to retirement investors.
On March 15, 2018, the U.S. Court of Appeals for the 5th Circuit determined the rule was outside of the scope of the Department of Labor’s purview and was illegal. The Department of Justice had until Thursday, June 21 to petition the Supreme Court to review the 5th Circuit ruling. It did not act, allowing the deadline to lapse. The 5th Circuit Court then announced that the fiduciary rule was officially vacated, meaning that it is no longer in effect.
A summary of the court’s decision and more details on the fiduciary rule are available here.
Please contact Paul Madrid at REDW Stanley if you have questions about the ruling or your investment needs. REDW Stanley will continue to follow the fiduciary rule regardless of this latest development.