Stew Lilker’s

Columbia County Observer

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Financial Advisors Will Have to Put You First

TALLAHASSEE, FL – Until now, not all financial advisers were required to put their clients first, before any investment funds they represent. This month, that's expected to change after the U.S. Department of Labor issued a fiduciary rule that will take full effect in 2018 and requires all financial advisers who give retirement advice to act in the best interest of their clients.

Jim Lardner, spokesman for Americans for Financial Reform, explained the problem.

"Brokers, insurance companies, salespeople and others can take advantage of loopholes - and have taken advantage of loopholes - to promote high-commissioned investment products that do very well for them but are not so good for the investor," he said.

Read the report:
Fixing the Drain on Retirement Savings

This is the first time the rules have been updated in 40 years. Opponents have said it requires excess paperwork and will result in higher costs for investors in the long run. Americans for Financial Reform estimated the lack of consumer protection until now has cost savers more than $17 billion annually.

Although the policy hasn't been mandated by law before now, many reputable investment companies require their advisers to sign a contract committing to act in the best interest of their clients. To protect yourself, Lardner said, ask your adviser if he or she has committed to such a standard.

"There are already a great many financial advisers out there who adhere to a best-interest standard," he said, "some because they're required to, some because they choose to, but either way, it's something they commit themselves to contractually."

According to a study by the Center for American Progress, even a seemingly small extra fee on an investment in a mutual fund can add up over time. A 25-year-old earning $30,000 a year and investing 5 percent of his or her salary annually would end up paying almost $100,000 extra over a lifetime with an extra fee of less than 1 percent.

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