There are significant changes going into effect on Friday and the following is a summary of 8 points of the new rules. 1. As independent financial advisors, we have dedicated our career to putting the needs of clients first. While there are numerous ways financial services are delivered to clients, I feel that our model, providing independent financial advice, is in the best interest of our clients. Regardless of whether the solutions our clients need pay a commission or a fee, we work together with our clients and empower them to make decisions that are truly best for them. However, like many things in life, the misdeeds of some can affect many. As a financial services professional, my business will soon be affected by new rules recently released by the Department of Labor (“DOL”) to curb the improper practices of a few unscrupulous players. 2. On April 10, 2016, the DOL issued a rule that goes into effect on June 9, 2017, and will have a major impact on the financial services industry and the clients it serves. With the rule, the DOL has defined a new standard requiring that all advisors who provide retirement planning services do so in a manner that is defined as being in the client’s best interest. This new rule is often referred to in the press as the DOL’s “Best Interest” rule. 3. As a practical matter, this rule does two things. First, it broadens the definition of what constitutes fiduciary advice. This is a fancy way of saying more advisors are going to be held to this fiduciary “best interest” standard when serving clients. Second, this rule expands the authority of the DOL to oversee individual plans known as Individual Retirement Accounts (IRAs). Since the DOL has never before exercised power over IRAs, many have compared the new “Best Interest” rule to the Affordable Care Act transforming medical care. 4. The DOL’s official documents state it issued this rule in order to better protect consumers. While we are in favor of any rule that truly does benefit the clients we have dedicated our career to serving, I fear the byproducts of this particular rule might outweigh the direct effects. 5. The new rule was issued under powers that the DOL maintains they possess through legislation passed in the early 1970s. While some may argue a change of this magnitude is really best left to Congress, where more discussion, collaboration and evaluation of the implications can play out, the DOL has chosen to act independently to enact this rule. Some members of the U.S. House of Representatives, the U.S. Senate and the U.S. Chamber of Commerce oppose the rule. 6. In terms of our feelings on this rule, we think it is well intended and focuses on a really important goal of protecting everyday people trying to save money. And while we hope it helps lessen conflicts of interest in the financial services business, the rule imposes significant burdens on a large segment of the industry already acting in their clients’ best interests. Unfortunately, these bureaucratic “solutions” will not deter bad actors from continuing to harm investors but will most likely add more costs to our business and increase the cost and complexity for the clients we serve. 7. There have been similar versions of this rule passed in the United Kingdom and Australia. It is too early to tell what the impact has been in these countries. Some have said the level of abuse has declined. On the flip side, others have said the cost of advice for clients has increased because advisors are forced to charge higher fees to comply with regulations. Others have said smaller clients have lost access to financial advice altogether. 8. Serving our clients’ best interest is something we have always set forth as our number one objective. I hope this has been your experience working with us over the years. Putting our clients’ interests first will remain core to the DNA of this practice. Acting in your best interest is an ethical standard we hold to because it is the right thing to do, not because the DOL says we have to. Further, I know that we have to earn your business every day and I appreciate the trust that you have placed in us to serve you well. We will continue to always do OUR BEST to serve you in any way that is truly in YOUR BEST interest. Thank you for affording us the privilege to do so. I do not take it for granted. Sincerely, Jonathan D Herbruck CFP Concord Advisors Website 440-358-0605 Fee-Based Planning offered through Concord Advisors a State Registered Investment Advisor Third Party Money Management offered through ValMark Advisers, Inc. an SEC Registered Investment Advisor Securities Offered Through ValMark Securities, Inc. Member FINRA, SIPC 130 Springside Drive, Suite 300 Akron, Ohio 44333-2431* 1-800-765-5201 Concord Advisors is a separate entity from ValMark Securities, Inc. and ValMark Advisers, Inc.
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