As we observed the inauguration of the 45th President of the United States and the transition from President Obama to President Trump, there are definitely going to be implications in how you receive and accept investment advice.

The Obama administration, through the Department of Labor, issued a rule that was going to go into effect April 2017 requiring your advisor to exercise a fiduciary (or best-interest standard) level of care when giving investment advice as it relates to retirement accounts, such as IRAs or 401ks. You may be surprised to hear that your advisor wasn’t held to a best-interest standard previously. A best-interest standard states that your advisor has to act solely in your best interest at all times. By contrast, many advisors work under what’s called a suitability standard, which means they merely have to make recommendations that are suitable to you as an investor. Shouldn’t your advisor have to be acting solely in your best interest anyway?

Now, we could talk about whether the government should require that through the Department of Labor or not, but here’s the reality. We are hearing that this rule is more than likely going to be pushed back and then be killed. It will probably be redefined and have more stringent standards than what’s in place now, but it will likely not go into effect the way the Department of Labor issued last year.

What does this mean for you?

There are many advisors in the marketplace already held to a fiduciary standard. Brogan Financial is a fee-based advisory practice that is regulated by the SEC. Usually if you are working with a fee-based advisor, they are held to a fiduciary level of care. If someone is working in a commission-based environment, where they get commissions on trades for example, they aren’t necessarily held to that same standard of care. Some people work in both worlds; they can trade for commission with securities or they can work for fees. But, does that mean they are going to act solely in your best interest at all times?

Nobody can completely eliminate all potential conflicts of interest, so a good advisor should have processes in place to mitigate and properly disclose those conflicts to you, as an investor, and then work in your best interest at all times.

The process when meeting with an advisor should be: your advisor is asking you a lot of questions, putting a plan together based on the answers to those questions, then giving you guidance and informing you of all the choices. You shouldn’t be in a situation where you go in, spend 20 minutes with someone and then get a product recommendation. That’s probably not someone who has taken the time to get to know your needs.

The focus is not the products, but the process used to achieve your goals. Products (stocks, bonds, etc.) are important, but the focus should be on your needs and desires and creating a plan to fulfill them.