What Does the Fiduciary Movement Mean for You?

What Does the Fiduciary Movement Mean for You?

February 07, 2017

Wouldn’t you agree that all Americans should have the right to honest and ethical financial advice?  The answer to this question is obvious and it stands to reason that most individual investors would feel this way.  As you may have read recently, the Department of Labor has issued new rules that are designed to help protect retirement savers from conflicted advice.  The rules are designed to extend a higher standard to financial professionals, requiring them to act in the best interest of their clients when offering advice and recommendations in retirement accounts.  

What is a Fiduciary?

A fiduciary is a firm or individual who has a legal duty to put their client’s interests first, ahead of their own. Another important role of any fiduciary is to utilize highly specialized experts to help in areas where the advisor may lack expertise.  This fiduciary standard has already been in place at many registered investment advisory (RIA) firms for several years.    

Currently, most recommendations made by brokers only need to be “suitable.” The problem with this is that some brokers may be tempted to sell high-fee products, even if an equivalent lower-priced option is available.  The motivating factor is to possibly receive a higher commission or larger compensation payout.  This is unfortunately happening at an alarming rate. According to a 2015 report from the White House Council of Economic Advisers (CEA), fees and biased advice costs middle-class families in America an average of $17 billion per year and reduces annual returns on retirement savings by 1 percentage point. This may sound small, but a 1 percentage point lower return can reduce one’s savings by more than 25% over the course of 35 years.

Additionally, while brokers might inform clients that they’re choosing to be paid commissions, if fees are outlined in a confusing manner, you may not know the total you’re paying or if the fees are even fair.

New Sheriff in Town

Despite all the recent progress towards a fiduciary standard, it may end up significantly different down the road or thrown out altogether.  As of last week, the new administration has officially delayed the implementation and may seek to significantly change the rules.  Although the new fiduciary rule was written with great intentions, it will increase costs for most firms across the wealth management industry.  Those additional costs could trickle down and hurt many smaller investors.

Full Steam Ahead

Some major brokerage firms have started contacting clients to move forward with these new changes.  Although warranted, individuals need to keep a close eye on any recommendations that are proposed and any new fees they are paying.  I recently heard a story from a client about his experience at another firm.  His broker told him that he had to enroll his retirement account in a fiduciary account charging 1.5% or they couldn’t work with their advisor anymore.  The result was an increase in fees of almost $15,000 per year.  We have advised all FWM clients to be aware of any sudden proposed changes without fully understanding the additional fees they will be paying.    

The Bottom Line

As you can see this can be a complicated issue, but it shouldn’t be.  It’s very straightforward in my opinion.  If you are trusting someone to give you guidance on your investments, they should always be acting in your best interest.  If you are uncertain as to whether your advisor is a fiduciary, simply ask them.  The answer is either yes or no, it’s that simple.  I’ve even heard of advisors putting this in writing to help put their clients at ease.   

At Fiduciary Wealth Management, we are independent investment management firm serving our clients as fiduciary 100% of the time. We are, and have always been, committed to providing you with the best advice we can give without any conflicts of interest. We only recommend solutions that we believe align with a client’s individual goals. As a result, we believe our business model offers greater transparency so you always know what you are paying in fees.

We are proud to share that we were recently highlighted in Arkansas Business to share our thoughts on providing clients transparency, conflict-free advice.  Our clients’ goals are at the forefront of our practice and we don’t take our fiduciary responsibility lightly.

About Rocklin Senavinin, CFP®

With nearly 20 years of experience in the financial services industry, Roc has dedicated his career to helping individuals live comfortably in retirement and enjoy the assets they have spent their career building. He is the founder of Fiduciary Wealth Management, a fee-only registered investment advisory firm in Little Rock, Arkansas. As a CERTIFIED FINANCIAL PLANNER™ professional, he has advanced training in the holistic process of creating a personal financial plan that addresses a person’s comprehensive needs for the short and long-term. Having built a successful career, he was named one of Arkansas Business’ 40 Under 40 in 2014, which honors intriguing business and political leaders under 40 years old. To learn more, connect with Roc onLinkedIn or visitwww.fidwm.com. If you have questions, feel free toschedule a phone call using this link!


This presentation is not an offer or a solicitation to buy or sell securities. Some of the information contained in this presentation has been compiled from third party sources and is believed to be reliable; however its accuracy is not guaranteed and should not be relied upon in any way, whatsoever. This presentation may not be construed as investment advice and does not give investment recommendations. Any opinion included in this report constitutes the judgment of Fiduciary Wealth Management as of the date of this report, and are subject to change without notice.

Additional information, including management fees and expenses, is provided on Fiduciary Wealth Management’s Form ADV Part 2.

Presentation is prepared by: Fiduciary Wealth Management • Phone: 501.351.7669 • Website: www. fidwm.com • Copyright © 2017, by Fiduciary Wealth Management.