This story on Trump and Obama supporting smart investments is sponsored by America First Credit Union – The member-owned, not-for-profit cooperative financial institution is the largest credit union in the state of Utah.
For years, brokers, financial advisors, and wealth managers were allowed to recommend to you one product or strategy over another simply because it paid them more money in commission or fees. And they didn’t even have to tell you why.
Those days are over.
The fiduciary rule is now in effect.
How The Fiduciary Rule Helps You
The fiduciary rule requires financial advisors, brokers, and wealth managers to act in the best interest of their client. That means they can no longer push you toward a decision that is not your best option simply so they can enrich themselves.
This may have been done to you by an advisor. Imagine it in this way: Let’s say your advisor has two options for you, one good and one great. But he steers you away from the great option to the good option because it will help him make more money. That’s a conflict of interest.
President Donald Trump’s Role
The Department of Labor under President Trump is rolling out this rule, but it wasn’t his idea. President Barack Obama first came up with it and set it to go into effect this past April. The Trump administration temporarily delayed it for review but has now put it into effect.
We rely a lot on the advice of financial industry professionals, so this rule should help protect us. But it won’t guarantee success in investing. It does not take the place of common sense or personal responsibility. You’ll still be able to make poor decisions with your money.
Rex Rollo, CFO of America First Credit Union points out that you really need to learn about the investments so you can make an informed decision. “The new rule will require that they be transparent, so that will give you any and all information that you need to help you make your investment decisions. But remember this doesn’t relieve you from doing your homework.”
Use The Info To Make Smart Choices
When working with an advisor, insist they be upfront with all fees and commissions. Ask for documentation on each part of your investment so you can see any fees for yourself. For example, if your advisor puts your money in a mutual fund, do you pay a fee to both him and the fund? Does the fund pay any other fees? This information will help you make smart decisions.