With the reversal of the Fiduciary Rule, we thought we would again share our thoughts and process.

Last Thursday, March 15th, the 5th Circuit Court of Appeals voided the Department of Labor’s Fiduciary Rule.  This rule required anyone in the financial services industry to work in their clients’ best interest in regard to retirement accounts.  This reversal means that an “advisor” can continue to recommend products that may have higher fees, higher commissions, and the representative doesn’t have to put their clients’ best interest ahead of their own.  They are free to just prove that the recommendation is “suitable”.

 As many of you know, our firm has been a major advocate of working as a fiduciary, on all account types, long before the rule was even in place.  But, the term fiduciary seems to be getting over used lately. 

 So, here is our definition, and the rules that our firm works by:

1. Fee-only investment management & planning, along with complete transparency in regard to compensation and fees, both in dollars and as a percentage. This includes:

   1. The amount a client pays my firm;

   2. The amount the client pays the custodian;

   3. The amount the client pays the investment/fund manager.

2. Eliminate, to the best of our ability, all conflicts of interest. If a conflict cannot be eliminated, than it must be minimized and fully disclosed.

3. No soft-dollar payments. Soft-dollar payment examples are “free” trips, gifts, etc.

4. No financial incentive or requirement to recommend one product over another. In other words, no kick-backs or pushing products.

5. All recommendations must be based in financial science, meaning the advice must be backed by academic and statistical research.

 Also, when an advisor joins our firm, on top of the applicable license requirements, we also require the advisor to cancel their broker’s license.  A broker’s license is commonly referred to as a Series 7 (and/or Series 6) license.  This requirement further proves our commitment to working at all times as a true fiduciary.

 Thank you,

The Synergy WM Team.