In addition to lots of questions about how the fiduciary rule will be enforced, the Department of Labor’s landmark regulations create an important opportunity for financial advisors and investment advisors to connect with their clients.
WSJ on Advisors’ Five Biggest Fiduciary Questions
It would be a massive understatement to say that the DOL’s fiduciary rule for financial advisors providing retirement advice has generated some questions about how the rule will be implemented and enforced.
There is no shortage of articles attempting to explain the rules and their implications for financial advisors. One of the most helpful articles of this ilk that we’ve found came from The Wall Street Journal. The WSJ recently convened a panel of experts to answer the five biggest questions financial advisors have been asking about what the fiduciary rule means for them, their practices, and their clients:
- Who decides what is a “reasonable” fee? How do I demonstrate that my fees are reasonable?
- How should I talk to my clients about the new rule? What do they need to know?
- Does the rule cover Keogh plans, SEP IRAs, and SIMPLE IRAs?
- What does the rule mean for an investment advisor who advises an employer-sponsored plan and may also advise participants in that plan with respect to rollovers?
- What should I know about my ability to sell proprietary products to retirement accounts under this rule?
How You Should Talk to Clients About the Fiduciary Rule
In response to question No. 2, one of the panelists provides particularly sound advice. Julie Ragatz, an assistant professor of ethics at the American College of Financial Services, says that while many clients won’t know about the fiduciary rule or understand its significance, advisors should be proactive in initiating conversations with their clients about the rule. “This is an excellent opportunity to emphasize your professional qualifications and detail the steps you take to maintain and expand your expertise,” Ragatz says in the article.
When major financial news occurs–be it a regulatory change, a dramatic shift in market conditions, a lawsuit against a large company, or the emergence of a new technology–advisors should approach these events as opportunities to reach out to clients. Regardless of whether the news is a net positive or a net negative for your business, you can use the news as an opportunity to build trust with your clients and position yourself as an expert. By providing an objective explanation of what the news means for your clients, you’re showing that you are 1) informed on the latest industry trends and 2) focused on your clients’ interests and concerns.
If you have a client newsletter as part of your financial advisor marketing plan, you may want to consider explaining the fiduciary rule in your next issue. Even if you don’t publish a newsletter, you can bring up the fiduciary topic in a one-off email to clients or during your next in-person client meeting.
About the Author
Scott Wentworth is the founder and head writer of Wentworth Financial Communications, a firm that creates content marketing and thought leadership for financial services firms and law firms. WFC has helped companies proactively communicate with clients about rule changes and other news affecting client relationships.