There’s a Department of Labor rule that was passed a few years ago that many people I talk to still have no idea about!
It’s mind boggling that this $40 billion stash is still being kept a secret…
Lucky for you, it’s time to grab your chunk of it.
As we all know, the retirement system is badly broken. And it all starts with retirement advisors who are much more interested in their own pockets than yours.
That’s why so many of them are happy to sell you money-grabbing products as part of your retirement plan, like overpriced junk bonds that will do hardly anything other than earn some cash for the seller.
So you can imagine my relief and excitement over this Department of Labor rule that’s virtually 100% pro-investor.
According to this new rule, any adviser providing advice to investors or retirement plans must recommend the most cost-effective AND the best-possible actions.
This is noted in the new rule by making all retirement advisers “fiduciaries,” which means they must put your interests first.
That’s why this rule is set to save individual investors around $40 billion over the next 10 years or so… and you’re entitled to some of that!
Here are the major aspects of this little-known Department of Labor rule:
1. The Fiduciary Rule
“Under DOL’s definition, any individual receiving compensation for providing advice that is individualized or specifically directed to a particular plan sponsor (e.g., an employer with a retirement plan), plan participant, or IRA owner for consideration in making a retirement investment decision is a fiduciary.”
As we mentioned before, this will close several loopholes that advisers have used to earn a quick buck at the expense of innocent savers and investors receiving poor advice.
2. Careful – Orders don’t constitute a fiduciary-necessitating action
Anytime a retirement or investment adviser is offering you advice, the fiduciary rule applies. However, if you simply call your broker up and order them to buy, sell, etc., that person is NOT giving you advice, which means he or she holds no fiduciary responsibility to you at that point.
So, advice equals fiduciary rule, while orders do not.
3. Commission-based vs. fee-based
Watch out for any brokers who are trying to get around this new rule to switch to fee-based accounts. This means that instead of charging commission on every product, advisers may now charge a flat 1% along with underlying fees to put your money in a portfolio or managed fund.
This may lead to you paying more than is necessary, considering that you could build your own portfolio with .25% fees through ETFs.
All in all, this is a good rule for the Average Joe. Just make sure that you understand what your adviser should be doing, and what your options are.
Armed with this knowledge, you can rightfully take your chunk of the $40 BILLION retirement stash!
NOTE: You have the right to know how much any retirement or investment adviser stands to make from a sale, so always ask. Make sure your advisers are working for YOU.
