New fiduciary rules will create a better-educated investor

To make money, one must constantly evaluate the state of the economy. It is always changing and when you adapt, you can create advantages for yourself. The latest change in the financial advising industry will benefit you as a consumer, but you will have to take more responsibility for educating yourself.

Instead of depending on an advisor to sell one product or another, consumers will investigate different products, make their decisions, and then rely on their financial counselor to help manage their money after that, perhaps with guidance on the investment markets, tax strategies and similar information.

The cost of services will go down because consumers will be doing more of the work. And confidence in the integrity of the service will increase because consumers will be better-educated and brokers won’t be allowed to advocate only for products on which they make a commission.

Change your advisor relationship

The new Department of Labor rule is responsible for this change as it imposes a fiduciary standard on advisors to most retirement accounts, which requires them to put the consumer’s interest front and center. We like to think that ideally a sale is made only when all parties benefit, but history shows that hasn’t always been the case in financial dealings. Too often, brokers pushed products for which they earned a sales commission and ignored other products that might have served their clients better.

I predict that under the new rules the job of financial advocates will change from selling to educating. This self-service economy will require simpler, less-expensive investment choices as consumers spend more time educating themselves. In return, the confidence they gain in their investment decisions will be invaluable.

If you have questions about annuities and how they might help meet your retirement objectives, write to me at Ask Jerry.

Or if you’d prefer to do more research on your own, take a look at the useful tools and information we offer in our Current Income Learning Center at Go2Income.com.