A lot of people have written a new department for most financial advisors work rules held a “fiduciary” standard. Until the rules take effect, most financial advisers held need to consult the “applicability” a watered-down requirements in the law. Two questions come to mind:

• What is in line with fiduciary standards and recommendations This is just the difference between appropriate recommendations
• How I know that, if a trust is truly as One? ?

The best way to explain these concepts are by way of example. Frank is 65 years old, very conservative, concerned about stock market volatility. He owes $ 300,000 on his mortgage, pay interest at 4%. He wanted to send ELL is $ 300,000 older rental house there is a potential income tax the sale of $ 50,000 IRA account is currently $ 400,000 in cash, $ 350,000.

A broker / dealer of “appropriate” consultation

First Frank sought to maintain the appropriate standard proxy opinion. Sarah applies to Wall Street based on a very large national companies. She knew that if she told Frank paid off the mortgage, she would lose potential business, and possibly her work. You see, because she held only a suitable standard, she owed her primary allegiance to her on behalf of the company, rather than investors.

In contrast, it is recommended Frank pay off the mortgage, but she brought out a graph showing how the stock and bond markets, trying to convince the people how to invest in the market will be paying off more than the history of the best retirement Mortgage. Finally, there is a lot of pressure 施加弗兰克 into cash, and the IRA were after-tax rental property in addition to stocks and bonds. Sarah will invest $ 1 million into the forthright costs $ 57,500 mutual fund commissions first antenna installed.

With 2:00 different opinions from the level of 2 RIA

Next, Frank fiduciary advice is recommended to keep the fiduciary standard two different registered investment advisor (RIA) is. RIA that he first heard from Sarah the same opinion, but will invest in no-load fund, so Frank can avoid paying a commission. RIA is recommended to pay off the second mortgage, investment and the rest for stocks and bonds. In these three meetingsFrank brought the fear of rising interest rates and questioning Ø˚F bonds are the best investment solutions. Similar reactions per consultant, citing the long history of bond performance statistics.

Sometimes you hold the same standard RIA does provide a completely different opinion? In answer to this question is absolutely yes. Take care of the fiduciary standards are not always applied consistently. One problem of this standard is that if you sell stocks and bonds for a living, you might believe that stocks and bonds everyone needs. If you sell annuity, rather than stock, you could tell how the stock market volatility frightening is that they go out with the world’s stock and bond investments.

Trustee suggested last piece has a different view

What could better trust search solutions ň look? Frank found the views of a RIA who is also a certified public accountant. The first recommendation is to pay off the mortgage. The second is a liquidity emergency access to credit, home equity lines. As for the rental of the house, instead of paying the sales tax, a tax deferred 1031 exchange is finalized, reinvested professionally managed apartment building. Finally, mixed stock and fixed-indexed annuity is recommended as an alternative to bonds.

Frank stored in income tax, improve cash flow, and has better growth potential risk was no significant increase in the overall portfolio.

Final word: I trust rules

I am usually very happy with the new DOL rules and its attempts to raise the bar to take my industry. However, I do not think the new rules is not enough. How adviser really provide the best advice, if they can not be licensed – and fully understand – stocks, bonds, real estate passive, insurance products and the impact of federal tax laws?

Finally, financial planning advice is based on your opinion of consultants. Based on the views of their familiar, their license and experience is varied between what advisors. Opinions can not be easily measured or compared.

Therefore, even if a new set of industry standards, it is still the best choice for their own financial advisers by the consumer when their due diligence.