SAN FRANCISCO, April 6, 2016 /PRNewswire/ -- Today the Department of Labor announced its long-anticipated fiduciary rule, designed to encourage investment firms to offer superior financial advice to families at lower cost. As a strong advocate in favor of these changes, Personal Capital re-affirms its commitment to the rule.
Personal Capital CEO, Bill Harris, was invited to Washington DC for the official launch of the fiduciary rule, along with Department of Labor Secretary Tom Perez and Senators Cory Booker and Elizabeth Warren.
What the ruling will require
Today, Americans hold $3.1 trillion in traditional pension plans, $5.3 trillion in 401(k)-type plans and $7.2 trillion in IRA accounts*. The new rule will legally require any financial adviser who advises clients on retirement accounts -- primarily 401(k)'s and IRA's -- to act as a true fiduciary, providing financial advice that is in their clients' best interest. Prior standards enabled advisers to recommend investments or products that were just considered "suitable" for an investor's needs. That means advisers can recommend the funds that pay them the biggest kickback, not necessarily the ones that are in the client's best interest. Bill Harris comments:
"This rule will be effective. For too long, many people have relied on brokers rather than advisors. Brokers are salespeople, who can sell whatever products make them and their firms the most money. A true advisor recommends solutions that are best for you, rather than them - working as a true fiduciary. Brokers and advisors can't act in someone's best interest unless they know what those interests are. That means taking the time to get to know the customer, learn their financial histories as well as their long-term goals."
Since inception, Personal Capital has acted as a fiduciary to its clients. As a Registered Investment Advisor, Personal Capital not only follows the fiduciary standard but embraces it as part of its mission to provide conflict-free financial advice.
What the ruling will mean for the future
At a time when over half over US adults (51%) feel overwhelmed when they think about the amount of money they need to save for retirement, it's critical that Americans can count on honest financial advice that will help them prepare for a secure retirement. While Personal Capital anticipates minimal, if any, changes to their business model due to the new rule, traditional financial institutions, as well as robo-advisors, will likely have to adapt.
With the new rule demanding transparency between financial advisers and clients, Harris sees technology as the only way forward. Advisers will be required to provide advice in the best interest of their clients, and the only way to assess their best interests is by having a view of their entire financial advice, which is made possible by the power of technology.
About Personal Capital
Personal Capital is a next generation financial advisor. The company melds technology with professional advisors to help households manage their wealth. Personal Capital's free app is available for iPhone, iPad and Android.
Disclaimer: Personal Capital Advisors is an SEC registered investment advisor. Any reference to the advisory services refers to Personal Capital Advisors. SEC registration does not imply a certain level of skill or training.
Contact: Marianne Ahlmann | Personal Capital | [email protected]
SOURCE Personal Capital