New era for financial advisors

Financial advisors are never free. Most of the time the fees/commissions are either not disclosed or are more than the client estimates.

The so called 'fiduciary' rule issued by the Labor Department (1,028 pages of which 208 pages define what a fiduciary is!!) is meant to require brokers to act as fiduciaries, meaning they have to give advice, which is in the best interests of the client and not simply offer 'suitable' advice. This will be followed by lawsuits as billions of dollars hinge on this rule for brokers and advisors. Sounds great but many experts say that it is watered down so that fine print in the contract with the advisor may allow previous behavior. Apparently, 317 pages are about a 'best interest contract exemption' which allows actions not favorable for clients. Besides, a lot of provisions in the new rule do not go into effect till January 1st 2018.

Fee based advisors charge an hourly fee or a fixed percentage (often 1% of assets under management but one has to be sure that small commissions are not thrown off by mutual funds or insurance policies. If a advisor acts as a fiduciary, they have to disclose this to the client.

Recently, several 'blind' spots were detailed about perceptions from the client and the advisor's perspective. .

Best advice is to get a good referral, screen advisors an d insist on full disclosure.