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  • Writer's pictureStephen H Akin

Fiduciary

Updated: 2 days ago

Akin Investments highlights the DOL Retirement Security Rule Investment Advice Fiduciary

Today the Employee Benefits Security Administration, Department of Labor posted the final rule in the Federal Register.


The Retirement Security Rule: Definition of an Investment Advice Fiduciary


Akin Investments is a true FIDUCIARY.


SPECIAL UPDATE:


Akin Investments was recently featured by FORBES, Chris Carosa Senior Contributor,

April 30, 2024


What is the new Fiduciary Rule?

Formally called the “Retirement Security Rule,” it updates the nearly 50-year-old definition of investment advice fiduciary. This original 1975 rule was created when few people had individual retirement accounts and before 401(k) plans even existed.


Note that the Department of Labor has oversight over retirement plans, not retail plans. The Securities and Exchange Commission (SEC) handles regulations involving a broader consumer market, including non-retirement retail investors. The SEC addressed fiduciary matters when it promulgated Regulation Best Interest in 2019. Reg B-I received a tepid response. Will the DOL’s new Fiduciary Rule meet a similar reception?


“I hope that it goes further than ‘Best Interest’ rule,” says Stephen Herbert Akin, founder of Akin Investments in Charleston, South Carolina. “I talk with people all day and it is something that the public does not understand. Then I show them headlines of major firms paying FINRA or SEC fines.”




 

When I began my Registered Investment Advisory firm I wanted to focus directly on the inherent conflicts of interest in the financial world.

Akin Investments, Solutions for a Complex World

Our Fiduciary Duty as your Registered Investment Advisor 


Akin Investments is a true fiduciary. As a "Fee for Service" adviser we sell no financial or insurance products. We do not take custody of clients funds or securities. What we offer is

independent professional advice.


Fiduciary relationships are often of the financial variety, but the word fiduciary does not, in and of itself, suggest pecuniary ("money-related") matters. Rather, fiduciaryapplies to any situation in which one person justifiably places confidence and trust in someone else, and seeks that person's help or advice in some matter. The attorney-client relationship is a fiduciary one, for example, because the client trusts the attorney to act in the best interest of the client at all times. Fiduciary can also be used as a noun referring to the person who acts in a fiduciary capacity, and fiduciarily or fiducially can be called upon if you are in need of an adverb. The words are all faithful to their origin: Latin fīdere, which means "to trust."


Retirement Security Rule: Definition of an Investment Advice Fiduciary


DEPARTMENT OF LABOR

Employee Benefits Security Administration

29 CFR Part 2510 RIN 1210–AC02


Executive Summary


The Department is issuing a final rule defining an investment advice fiduciary for purposes of Title I and Title II of ERISA. The final rule defines when a person is a fiduciary in connection with providing advice to an investor saving for retirement through a workplace retirement plan or other type of retirement plan such as an IRA. Such retirement investors include participants and beneficiaries in workplace retirement plans, IRA owners and beneficiaries, as well as plan and IRA fiduciaries with authority or control with respect to the plan or IRA.


Under the final rule, a person is an investment advice fiduciary if they provide a recommendation in one of the following contexts:


• The person either directly or indirectly ( e.g., through or together with any affiliate) makes professional investment recommendations to investors on a regular basis as part of their business and the recommendation is made under circumstances that would indicate to a reasonable investor in like circumstances that the recommendation:

○ is based on review of the retirement investor's particular needs or individual circumstances,

○ reflects the application of professional or expert judgment to the retirement investor's particular needs or individual circumstances, and

○ may be relied upon by the retirement investor as intended to advance the retirement investor's best interest; or

  • The person represents or acknowledges that they are acting as a fiduciary under Title I of ERISA, Title II of ERISA, or both with respect to the recommendation.

The recommendation also must be provided “for a fee or other compensation, direct or indirect” as defined in the final rule.


As compared to the previous regulatory definition, which was finalized in 1975, the final rule better reflects the text and the purposes of ERISA and better protects the interests of retirement investors, consistent with the Department's mission to ensure the security of the retirement, health, and other workplace-related benefits of America's workers and their families.


The final rule is designed to ensure that retirement investors' reasonable expectations are honored when they receive advice from financial professionals who hold themselves out as trusted advice providers. The Department's regulation fills an important gap in those advice relationships where advice is not currently treated as fiduciary advice under the 1975 regulation's approach to ERISA's functional fiduciary definition. This may be the case even though the financial professional holds themselves out as providing recommendations that are based on review of the retirement investor's needs or circumstances and the application of professional or expert judgment to the retirement investor's needs or circumstances, and that can be relied upon to advance the retirement investor's best interest.


For the complete text of the new DOL Rule download here:


2024-08065 Fiduciary Rule
.pdf
Download PDF • 1.97MB

 

There are two main categories of professionals who can help you: the Stockbroker and the Registered Investment Advisor.


They differ in two ways, A) their level of responsibility to you and B) how they get paid.


A stockbroker is an employee at a financial firm who is paid a commission based on what you invest. He/she is basically a sales person. The investment they sell you must be appropriate at the time of the recommendation but they have no further, on-going responsibility to you.


During the “know your client” conversations, the stockbroker learns many things about you and your financial needs, including

  • How old are you?

  • What is your investment time horizon?

  • Is your investment intended for retirement, down payment on a home,

your child’s future college expenses or something else?

  • What is your profession?

  • What is your annual salary?

Registered Investment Advisor, on the other hand, are fiduciaries, meaning your interests always come first. You will have a continuing relationship with your RIA. An RIA must register with the SEC or state securities regulator, depending upon the assets under management.

  • Financial Planners help individuals and corporations meet their short-and long- term financial goals. Services include asset allocation, estate planning, tax planning, retirement and more.

  • There are several methods by which you might pay an investment advisor, including a fixed fee, an hourly fee, or a percentage of the value of your assets they are managing.

Begin with a search of the firm and it's representatives with FINRA's BrokerCheck!


 

As a Registered Investment Advisor we can help design a strategy to help you reach your goals smarter and faster.


Take the next step, schedule a free consultation and learn how we can help you.


Asset and Cash Management Solutions








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