Broker Check

What the Fiduciary Movement Means For You

| June 27, 2017
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Wouldn’t you agree that all Americans should have the opportunity to obtain ethical and truthful financial guidance? The answer to this question is clear and needless to say most individual investors would feel this way. Many of you may have seen or heard recent media coverage surrounding the Department of Labor’s (DOL) new fiduciary rule which is designed to help protect retirement savers from conflicted advice.  The rule went into effect on June 9th with full implementation slated for January 1st, 2018.  As your trusted advisors, we wanted to take this opportunity to address the new rule and explain how we are a fiduciary and work diligently and in good faith to ensure we are continuously acting in your best interest.

What is a Fiduciary?

A fiduciary is a firm or individual who has a legal obligation to put their client’s interests first, ahead of their own.  The rule expands the “investment advice fiduciary” definition under the Employee Retirement Income Security Act of 1974 (ERISA).  This ruling elevates all financial professionals who work with retirement plans or provide retirement planning advice to a level of a fiduciary, bound legally and ethically to meet the standard of that status.

Currently, most recommendations made by advisors only need to be “suitable.” This suitability standard that brokers were once held to is now gone for retirement accounts and is replaced with the fiduciary standard. This means that advisors must assess whether a product is in the best interest of the client given their financial condition. Most offerings will be fee-based, rather than commission-based.

Fiduciary care represents the highest criterion of excellence and fiduciaries possess the technical expertise, specialized knowledge and experience that equip them to render guidance. They are also bound by an undivided loyalty to their client.

The Six Core Fiduciary Duties embody the major elements of fiduciary responsibility under the Advisers Act of 1940.

The six duties are:

  • Serve the client’s best interest
  • Act in utmost good faith
  • Act prudently -- with the care, skill and judgment of a professional
  • Avoid conflicts of interest
  • Disclose all material facts
  • Control investment expenses

These six duties are responsibilities that Herbert Financial Group has upheld and will continue to uphold.  We are extremely proud of our role as a fiduciary and we promise to operate under the fiduciary standard as defined under the above act.

Full Steam Ahead

In the midst of this industry change, all of us at HFG are working diligently to ensure our methodologies and communications directly reflect our role as a fiduciary.  

  1. We actively complete an entire audit of our Client Relationship Management System each year to ensure we are keeping detailed and accurate records of client activity, risk tolerance questionnaires, client agreements, contact information, etc. We use an ongoing fact-finding process to keep all records up-to-date in regards to your career, health, taxes and estate.

  2. We operate in full transparency and in full-disclosure. Our website and marketing materials lay out our new client process in an informative and transparent manner so clients know exactly what to expect when working with us.
  1. We consistently update our content library on our website to ensure all of our articles and videos align and are in accordance with any industry changes. Some of our new content pieces include the following topics: Goal-Based Strategies, Risk and Return, How to Determine Fees on Your ETF, The Benefits of Passive Money Management, 10 Factors To Consider Before Rolling Over Your IRA.
  1. We work hard to keep our clients and prospects educated and engaged through the use of scheduled portfolio reviews and full financial plans, weekly market updates, social media, email updates, the HFG blog, newsletters, client events, and website resources. We truly believe an educated client is an empowered client and we use the above resources to keep the advisor-client channel open which we feel is directly in line with our role as a fiduciary.

The Bottom Line

If you are trusting someone to give you guidance on your investments, they should always be acting in your best interest. The premise upon which HFG was founded has always been one with a client-centric focus as demonstrated by our vision statement which was developed in 1985 at the firm’s inception.  HFG’s vision statement is “to be trusted and respected by our clients for our professional knowledge, integrity, independent advice, and exceptional service.” The extremely high personal standards that HFG was founded upon are now stronger than ever and we are doubling down on our commitment to each of you. 

At the end of the day, the new DOL regulations are not to be feared and are an integral part of industry evolution. The financial business has always been about building long-term and trusted relationships and this new rule simply turns things up a notch. 

We thank you for placing your trust in HFG and we promise to maintain that trust by continuously practicing transparency and objectivity by placing our clients’ goals are at the forefront of our firm.

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