What does it mean to be a fiduciary, anyway?

If you read financial news, you have likely noticed differing opinions over the “fiduciary rule” that was proposed by the U.S. Department of Labor (DOL).  After a long development phase, comment period and revisions, the rule became law in June 2016 and was due to go into effect on April 10, 2017.  In short, one of the main requirements of the rule is that all financial advisors to retirement plan accounts act as fiduciaries when advising those accounts.  Due to the recent changes in the political landscape, the effective date has been delayed at least 60 days and may be delayed further, or the law may be repealed.   Before you decide which opinion you share, it is imperative to understand the answer to one question:  what does it mean to be a fiduciary anyway?

By definition, fiduciary means “held or founded in trust or confidence.”  Relating to the financial advisory industry specifically, being a fiduciary requires that a financial advisor act solely in the best interest of the client when providing financial advice.  Financial advisors that are registered with the U.S. Securities and Exchange Commission (SEC), as JoycePayne Partners is, are required to act as a fiduciary to all clients at all times.  If an advisor is not registered with the SEC, they may be regulated by FINRA and held to a “suitability” standard.  Advisors held to this standard frequently get paid commissions for selling products.  They must recommend investments that are suitable for their clients, but may prioritize their own personal gains (products with higher commissions, for example) over the gains of their clients.  JoycePayne Partners, and many other fiduciary advisors, do not sell products, do not get paid commissions, and always offer conflict-free advice to our clients.

JoycePayne Partners has been a fee-only firm acting as a fiduciary for our clients for 24 years and counting.  We know how we feel about the issue, regardless of what happens to the DOL rule.