The Department of Labor has proposed changing a law that dates back to 1975. In essence, the new regulation would expand the meaning of the term “fiduciary” to include those who handle IRAs. The 1975 definition was outlined in the Employee Retirement Income Security Act (ERISA) and did not include those who managed Individual Retirement Accounts because they were a new concept in the investment world. Now, they’re a popular choice among many Americans. Yet, those who manage IRAs and provide advice regarding the investment aren’t held to the same regulatory standards as brokers.
The proposed DOL changes are designed to protect consumers, especially those who have small IRA accounts, from non-fiduciary advice. However, opinions vary as to whether this will actually help, or cause this group of investors to be abandoned because the commission from a small IRA is simply not worth the work a broker would put into it. It’s an interesting debate. And one you can read more about at http://www.investopedia.com/articles/financial-advisors/010516/how-likely-new-fiduciary-rule-2016.asp.