LITTLE ROCK, Ark. (Eric Hutchinson) - Most of us put away what we can each paycheck towards our retirement, but a new rule recently put into effect by the Department of Labor may have a big impact on your savings .
Eric Hutchinson of United Capital Financial Advisors came to THV11 This Morning to explain how the new Fiduciary Standard rule affects you and answered the following questions:
What it means to your retirement savings
The Department of Labor recently put into effect its new Fiduciary Standard rule which will impact just about everyone with any retirement savings. Eric Hutchinson of United Capital Financial Advisors is here to explain how this new rule affects you.
Why is the Department of Labor issuing this new Fiduciary Standard rule?
This has the potential to have a huge impact on most Americans. Individual investors have more than $24 trillion in retirement savings, including $7 trillion that's in Individual Retirement Accounts, or IRAs. A new rule from the Department of Labor will change the way people get advice on how to invest that money, by holding investment professionals to what is called a "fiduciary standard." This will potentially increase the quality of investment advice investors receive and possibly lower investment costs that could contribute to a better bottom line for all Americans who are saving for retirement.
What does this change mean?
The Department of Labor, which regulates tax-advantaged savings accounts, is bringing more investment advisors under an already existing rule known as the "fiduciary standard," which requires financial advisors to put their clients' best interests ahead of their own profits.
Up to now, only financial professionals and firms registered as investment advisors followed that rule. Brokers, insurance agents and most other financial professionals are held to a "suitability standard" which only required that they make investment recommendations that are suitable for their clients, but not necessarily the best option or the lowest cost option.
Who's impacted by this new rule?
The rule covers all financial professionals offering investment advice for retirement accounts — including 401(k)s and IRAs. Under the new rule, your advisor must follow the "fiduciary standard" in recommending investments for your traditional or Roth IRA, suggesting investments when rolling over 401(k) assets to an IRA or helping you set up a solo 401(k), SEP-IRA, or simple IRA if you're self-employed.
What happens when?
The broader definition of fiduciary will take effect in April 2017, according to the DOL. Until then, if you are not sure which standard your financial professional follows — make sure you ASK!
Where can viewers go to learn more?
They can visit our website: www.unitedcp.com/ar1 or contact Eric Hutchinson directly at 800-635-9985.