Beware of Department of Labor Changes - Jay L. Gershman

Jay Gershman |

It's a holiday phenomenon that while sipping eggnog or enjoying a football game, someone will ultimately bring up the issue of how their investments are doing.  This year the boasters will probably inflict even more pain as many concerned citizens stayed on the sidelines until after the election, only to watch as markets have soared ever since. 

This year will bring another potential question. "Did you get a letter from your investment guy about the DOL rules and these new fees"?

I thought it would be a good idea to give you a quick summary of what is coming and what you and your friends should be watchful for. 

The department of labor put into effect for April 2017 changes that affect retirement plans only.  The rules are too numerous to spell out here, but realize that affected accounts will be Traditional and ROTH IRA's and primarily those in fee-based accounts. 

What hasn't changed - some people have been told that their commission-based portfolios will change.  Technically, the law leaves commission-based accounts unaffected until January 2018.  There is no requirement that commission-based accounts must be turned into fee-based accounts: BEWARE

Taxable brokerage accounts - the DOL rules did not affect non-retirement accounts specifically.  If your stocks and investments have been in a traditional commission based arrangement without an annual fee to actively manage the account, there is no requirement for you to start paying a fee:  Once again BEWARE

Bottom line: the DOL rules were put into place to reduce conflicts of interest and protect the common investor.  While some additional expense may result, beware of companies and advisors looking to create new revenue sources. 

Tell your friends that if their advisor isn't showing them the love, maybe it's time to see how other advisors and their broker-dealers are implementing these rule changes.




Jay L. Gershman is an AIF (Accredited Investment Fiduciary), and a RLP (Registered Life Planner).  This material was prepared by the author, and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note - investing involves risk, and past performance is no guarantee of future results. Jay L. Gershman is a Registered Representative of Securities Service Network, Inc. Member FINRA/SIPC. Advisory Services offered through SSN Advisory, Inc.