What advisors don’t know could hurt them — but what advisors think they know could hurt them even more.
With more than four months having passed since the U.S. Department of Labor released the final language of its fiduciary rule, advisors are still digesting the regulation’s implications.
Yet with less than eight months before the new rule goes into effect, a number of misconceptions still exist, according to Concord, Calif.-based AssetMark.
“There continues to be misconceptions or, if nothing else, a lack of awareness concerning what the requirements will be,” says Matt Matrisian, senior vice president of strategic initiatives for AssetMark. “Advisors are kind of sitting on the sidelines to see what their broker-dealers or custodians will do, they’re waiting to see how the industry is going to operate. They’re being reactionary.”
In a recently released infographic, AssetMark uncovers seven common myths surrounding the DOL’s fiduciary rule.
Myth No. 1: The final version of the DOL was weakened so it will not impact an advisory business.
Not so. According to AssetMark, the final rule will require all advisors and brokers to operate under the ERISA fiduciary standard, which at its core mandates that advisors avoid any conflicts of interest when recommending investments.
“The goal of the DOL was to implement a fiduciary standard across all of the retirement accounts to eliminate those conflicts, and that’s what they did,” Matrisian says. “After their initial draft, they did incorporate some feedback from the industry to allow them to transition to the requirements to the new rule, which led to a perception that the rule was weakened, but what they actually created was a stop-gap, not a long-term remedy for the DOL regulations themselves.”