Fiduciary Rule Goes Into Effect Today

A new law could mean big changes for your retirement savings

June 9, 2017 - Today, the Department of Labor (DOL) officially implemented the "Fiduciary Rule" (also known as the the "Conflict of Interest Rule").

Beginning today, financial institutions and retirement plan advisors must provide advice and act in the best interests of their clients - putting their clients' interests above their own.

Many consumer advocates say the fiduciary rule is a momentous step in the right direction for workers hoping to retire comfortably.

The fiduciary rule lays out “consumer protection standards” that advisors must adhere to. They are as follows:

  • Give advice that is in the “best interest” of the retirement investor.
  • Charge no more than reasonable compensation; and
  • Make no misleading statements about investment transactions, compensation, and conflicts of interest.

The new fiduciary rule will apply only to advisors working with your retirement assets—for most people, that’s a 401(k), or a Roth or traditional IRA.

What the Fiduciary Rule Means For You

You'll See What You’re Paying For

Under the new rule, there’s a push for firms to be more transparent around the fees you’re being charged.

Not sure what you're paying for? Ask your advisor how he or she is getting paid to work with you—and how much their cut will be.

You May Want to Make a Change

Do you think your advisor is a fiduciary? They might not be.

Currently only 10% of financial advisors are fiduciaries.

If you are sensing issues —if you're not happy with your new fee-for-service arrangement, for instance, or you're asking any of the preceding questions and getting fuzzy answers—it may be time to leave your advisor.


Close Tax and Health-Care Reform Back in the Spotlight

Republican efforts to repeal and replace the Affordable Care Act (ACA) failed in late March. In the immediate aftermath, it appeared that health-care reform efforts would be set aside in favor of advancing a tax reform agenda.1 Then, in a one-two punch that surprised many, the White House called for a vote on a revised repeal-and-replace health-care plan and announced the broad outline of a new tax reform plan.2 It would be a mistake to consider the two completely separate efforts, because in some ways they are actually closely connected.

White House announces new tax proposals in broad terms

The tax reform plan announced by the White House includes reducing the current seven tax brackets to just three: 10%, 25%, and 35%. It proposes doubling the standard deduction amount and eliminating both the alternative minimum tax (AMT) and the federal estate tax. The plan would preserve existing deductions for home mortgage interest and charitable donations, but would eliminate most other deductions, including the ability to deduct state and local taxes.3 Essentially, this was a "stake in the sand" to establish a starting point for negotiations with Congress. Details must be determined, and changes are likely as discussions progress.


Tax provisions also a part of health-care reform

The ACA contains significant tax provisions, including the 3.8% net investment income tax and the 0.9% Medicare payroll surtax, which both target high-income individuals. The initial repeal-and-replacement effort would have eliminated or modified many ACA tax provisions — that's almost certain to be true for a revised plan as well. And any health-care reform package is likely to balance lost tax revenue with reductions or limits to subsidies and Medicaid outlays. If the ACA tax provisions are not addressed in a health-care reform package, they're likely to be included as part of the tax reform discussion, increasing the scope and complexity of the tax debate. In fact, the White House tax reform announcement specifically called for repeal of the 3.8% net investment income tax.4

Budget reconciliation

Further complicating the issue, Republican legislators — who lack 60 votes in the Senate to overcome a Democratic filibuster — plan to use a process called budget reconciliation to pass both health and tax reform legislation with a simple majority vote. Under budget reconciliation rules, any reform measure must not increase the federal deficit beyond a 10-year period. This restriction means that unless tax cuts are offset by revenue savings elsewhere (e.g., spending cuts or reduced deductions), they must expire after 10 years.

1) See for example Nick Timiraos and Richard Rubin, "GOP Shifts Focus to Next Target: Tax Code Revamp," Wall Street Journal, March 25, 2017

2) John T. Bennett, "White House: Final Health Care Deal Unlikely This Week," Roll Call, April 26, 2017, and Briefing by Steven Mnuchin, Secretary of Commerce, and Gary Cohn, Director of the National Economic Council, April 26, 2017,

3,4) Briefing by Steven Mnuchin, Secretary of Commerce, and Gary Cohn, Director of the National Economic Council, April 26, 2017,

ASA Staff Update

We are happy to announce that our very own Research Analyst, Rosario 'Sal' Salamone just received his CIMA® certification!

The CIMA® (The Chartered Institute of Management Accountants) certification program is the only credential designed specifically for financial professionals who want to attain a level of competency as an advanced investment consultant.

The CIMA® certification is one of the most valued certifications in the investment consulting and wealth management industry. CIMA® professionals manage more assets and have more experience than most financial professionals. The certification helps advisors improve their practice—and deliver an exceptional experience to clients.

CIMA® professionals are elite advisors who apply advanced investment theory and integrate a complex body of investment knowledge systematically and ethically to assist clients in making prudent investment decisions. They provide objective, transparent, fair investment advice to the investors they serve.

In order to earn and maintain a CIMA®, some of the things that one must do:

  • Document at least three years of financial services experience. 
  • Pass comprehensive examinations
  • Complete an educational program from a top-20 business school
  • Agree to adhere to an ethical code of professional responsibility and complete 40 hours of continuing education every two years, including two ethics hours.

Great job, Sal!