"Retirement Advisors" vs. Wall Street Advisors: Who Can You Trust?Submitted by Reby Advisors | Certified Financial Planners | Danbury, CT on March 4th, 2017
When it comes to retirement planning, it is easy to get confused and overwhelmed by the complexity. While past generations of workers could rely on their employers to save a portion of their salaries and use it to provide a steady stream of retirement income, today's workers do not have that luxury. These days, less than a quarter of all workers have access to any kind of pension plan, and the percentage of workers covered by traditional defined benefit plans continues to shrink with every passing year.
In the place of those defined benefit plans are defined contribution plans, a completely different type of retirement planning vehicle. These plans, typically 401(k) and 403(b) programs, rely on the workers themselves to set aside a portion of each paycheck. Sometimes the employer kicks in a bit as well, but even the most generous 401(k) or 403(b) plan cannot guarantee future income the way pension plans once did.
The shift from traditional defined benefit pension plans to new style defined contribution plans has created a lot of changes, but the most significant is the shift in risk from employer to employee. In the past, businesses had to manage their pension plans carefully, and they were ultimately responsible for any shortfall. The emergence of defined contribution plans has tilted that balance, and now it is employees, not their bosses, who will suffer if they misjudge the size of the nest eggs they will need to see them through their retirement years.
That is why so many workers turn to financial advisors for independent help and guidance. They rely on those financial professionals to make recommendations that will help them maximize their post-retirement income while minimizing future taxes and increasing the likelihood their accumulated assets will be there for the rest of their lives. If you'd like to learn more about the financial strategies that may help you sustain the lifestyle you currently enjoy through retirement, sign up for our free webinar, RETIREMENT: READY OR NOT? Your 5 Personal Decision Points ...
Are Financial Advisors Required to Put Your Interests First?
When workers seek advice and guidance with their 401(k) plans, IRA accounts and other retirement plans, they often assume that their advisor will always put their best interests first, and that they will avoid conflicts of interest that could harm their clients and put their futures in jeopardy.
Unfortunately, those assumptions are not always grounded in reality. While many financial advisors and other professionals do in fact put the best interests of their clients first, until now many have been under no legal obligation to do so.
The "Fiduciary Rule" and What It Means for You
Many financial planning customers do not know of the Department of Labor's new “fiduciary rule,” a regulation, that if it goes into effect, will require financial professionals to put the best interests of their clients first when providing advice for retirement accounts. Until that fiduciary rule goes into effect, those financial advisors are not required to put their clients' best interests first. If they choose to pick the investments that provide them with the highest commissions, they are free to do so, even if their client would have been better served with another investment.
Believe it or not, the fiduciary rule was controversial from the start, with many in the banking and financial industries complaining that it would be too expensive to implement and too confusing for their clients. Now it seems the fiduciary rule may be in jeopardy, and President Trump recently announced that the Department of Labor would be reviewing the regulation. Many industry watchers think the fiduciary rule, which was to have gone into effect on April 10, 2017, will ultimately be delayed if not repealed entirely.
That means those planning for retirement need to be especially vigilant, and very careful, when seeking advice for their retirement plans. They need to find out how their advisors are compensated, why they are making the recommendations they are and what they stand to gain from the transactions. In the end, it is their retirement on the line, and they need to do what they can to protect it.
Free Webinar ...RETIREMENT: READY OR NOT?
If you would like to learn more about the inherent conflicts for financial advisors, the future of the fiduciary rule and other important subjects, we invite you to watch our exclusive webinar: RETIREMENT: READY OR NOT? Your 5 Personal Decision Points.
President and CEO Bob Reby, CFP®, created this webinar to help retirement investors understand the difference between “retirement” advisors and Wall Street advisors, as well as four other critical decision points that will impact whether you will be able to sustain the lifestyle you currently enjoy through retirement. Click the button below and sign up today.