What’s All the Hype About the Fiduciary Rule?

The Fiduciary Rule

What’s All the Hype About the Fiduciary Rule?

  Neal Price, Principal

February 7, 2017

Over the weekend, the White House issued an “executive action” directing the Labor Department to review the so-called “fiduciary rule.” While this has been a hot topic for years among those of us in the investment world, this new rule has only recently become well-known to the public.

Anyone who receives financial advice from a professional should be familiar with the fiduciary rule, as it addresses potential conflicts of interest that may drive the advice investors receive. In case you catch a news clip or read an article about the recent happenings, we would like to provide you some background information. As you likely already know, Strategic Wealth Partners operates under a fiduciary standard, and always has.


Several years ago, the Obama administration began advocating that investment firms be required to put their clients’ interests ahead of their own. After years of proposals, redrafts, comment periods, etc., these efforts culminated in the April 6, 2016 issuance of the final fiduciary rule. Importantly, as currently enacted, the rule applies only to retirement accounts including IRAs, 401(k), pension plans, etc. It does not apply to taxable investment accounts.

What this means is that, rather than a “buyer beware” concept where an investment must simply be “suitable” at the time of purchase, the new rule requires that the client’s interest be placed first at all times. Among other things, this rule would make commission-based product sales problematic (though not impossible).


Consumer advocates have cheered the rule, in the belief that the investing world has become terribly complex and it is extremely difficult to understand all the features (including costs) of the investment products available. The idea is that, all too often, a given investment product is “sold” to the consumer, who sometimes can’t readily know if it’s best for the consumer, or best for the advisor.

On the other hand, large Wall Street firms – brokerage firms in particular – have argued passionately that the rule would reduce customer choice, drive up costs, and make investment advice beyond the reach of many consumers (smaller investors in particular).

We believe that it’s disingenuous at best to argue against putting the customer first, though we are also sensitive to the issue of too much regulation. From the big-picture perspective, a fiduciary standard should make for a better and healthier investor experience. But selfishly, since we already operate as fiduciaries, enacting the rule would reduce our competitive advantage.


The administration has not killed or even delayed the rule. The requirements of the fiduciary rule are already in effect, though compliance with its provisions is not required for another 60 days or so. Instead, the executive action is really a memorandum from the president that kicks the issue back to the Department of Labor for its review. It’s a decent bet that it will at least be delayed for a period, and possibly watered down or repealed entirely.

If the fiduciary rule were to stay as is, there would be a small additional burden on firms like ours, but importantly, no fundamental change in how we work with clients. As a registered investment advisor, we operate under a fiduciary standard and always have. The very nature of our approach to wealth management and our advisory-fee-based structure helps avoid conflicts.

To be sure, it is impossible to completely eliminate all conflicts of interest. But we have gone to great lengths to minimize these conflicts wherever practical, and we embrace our role as our clients’ fiduciaries. We take great pride in knowing that we place our clients’ interests first, and we work hard every day to help our clients achieve their financial goals. So while the future of the fiduciary rule is uncertain, our clients can rest assured that we at Strategic Wealth Partners are now and will remain fiduciaries.

As always, we would be pleased to discuss this issue with you in greater detail.


This newsletter contains general information that is not suitable for everyone. The information contained herein should not be constructed as personalized investment advice. Past performance is no guarantee of future results. There is no guarantee that the views and opinions expressed in this newsletter will come to pass. Investing in the stock market involves gains and losses and may not be suitable for all investors.  Information presented herein is subject to change without notice and should not be considered as a solicitation to buy or sell any security.

Strategic Wealth Partners (‘SWP’) is an SEC registered investment advisor with its principal place of business in the State of Illinois. The brochure is limited to the dissemination of general information pertaining to its investment advisory services, views on the market, and investment philosophy. Any subsequent, direct communication by SWP with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. For information pertaining to the registration status of SWP, please contact SWP or refer to the Investment Advisor Public Disclosure website (https://www.adviserinfo.sec.gov).

For additional information about SWP, including fees and services, send for our disclosure brochure as set forth on Form ADV from SWP using the contact information herein. Please read the disclosure brochure carefully before you invest or send money (https://www.stratwealth.com/disclosure-statement).

Share this post:

Blog Archives