Changes target financial adviser conflicts of interest and require all advisors to adhere to a “fiduciary standard,” the legal term for putting customers’ interests first and above all else. Brokers and other professionals had previously had to make sure that their recommendations were “suitable,” a much lower standard that allowed them to steer clients toward investments that pay higher fees and commissions.
The U.S. Department of Labor released new regulations in April 2016 that requires any paid financial advisors to do what is right for their customers, even if it results in lower fees, a change in that department is said to possibly save investors $40 billion over ten years.
The new rules, scheduled to go into effect in several phases starting in April 2017, could have a profound effect on people who are saving for retirement, according to supporters.
“It’s a tremendous victory for consumers,” says Nancy LeaMond, executive vice president of AARP, which fought hard for the change. “Bad financial advice is just wrong, and this rule will no longer permit advisors to put their own interests ahead of their clients.
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