---
title: "The Definition of Fiduciary Matters: Here’s Why"
description: The definition of fiduciary is important to investors due to new rule from Department of Labor. Read this to learn what investors should look for.
image: http://www.wrapmanager.com/hubfs/blog-files/Trusting_your_Financial_Advisor.jpg
---

[![Assembly Wealth](https://www.letsassemble.com/hs-fs/hubfs/Assembly/logos/Assembly-Wealth-Logo-Orange-500px.png?width=300&height=70&name=Assembly-Wealth-Logo-Orange-500px.png "Assembly Wealth")](https://www.letsassemble.com/)

The Money Manager People TM

[800-541-7774](tel:+18005417774)

[![RESEARCH MONEY MANAGERS](https://no-cache.hubspot.com/cta/default/10700/7ecbcb66-3fbb-41e3-b219-c24fb3c769c5.png)](https://cta-redirect.hubspot.com/cta/redirect/10700/7ecbcb66-3fbb-41e3-b219-c24fb3c769c5)

[![Client Center](https://no-cache.hubspot.com/cta/default/10700/8691dcb4-caa3-42c2-a810-77b59f461fd2.png)](https://cta-redirect.hubspot.com/cta/redirect/10700/8691dcb4-caa3-42c2-a810-77b59f461fd2)

[Home](https://www.letsassemble.com/)

WrapManager's Wealth Management Blog

When life changes, we can help you thoughtfully respond.

[< Back to read another post](https://www.letsassemble.com/wealth-management-blog)

# The Definition of Fiduciary Matters: Here’s Why

Posted by [ Michael J. O'Connor | CWS®, Vice President Investments](https://www.letsassemble.com/wealth-management-blog/author/michael-j-oconnor)  
 May 25, 2016

- [Tweet](https://twitter.com/share)

![Trusting_your_Financial_Advisor.jpg](http://www.wrapmanager.com/hubfs/blog-files/Trusting_your_Financial_Advisor.jpg "Trusting_your_Financial_Advisor.jpg")On Wednesday, April 6, the U.S. Department of Labor finalized what they’re calling the “rule to address conflicts of interest in retirement advice.” Many advisors have been concerned about what the rules would actually entail, and how it might affect their business models. According to a survey of 485 [financial advisors](http://www.wrapmanager.com/your-guide-to-finding-a-better-financial-advisor) conducted by Fidelity, 73% are concerned the rule will have a negative impact on the way they do business. 

In short, the rule states that any advisor/broker that handles retirement accounts must adhere to the fiduciary standard (*to note: WrapManager already adheres to the fiduciary standard, so we do not anticipate any significant changes to how we operate).* That means that no matter what the product involved—stocks, annuities, mutual funds, separately managed accounts, or commission products—the advisor must by law put the client’s best interests ahead of their own. Before the law, certain brokers and types of advisors could recommend a product as long as it was “suitable” for their clients.

### What Does This Mean for Investors?

For one, the new rule only applies to retirement accounts, so any taxable assets/investments you have would not fall under this rule. For retirement accounts, like rollovers for instance, a financial advisor must provide impartial advice in their client's best interests, and the advisor cannot accept any payments creating conflicts of interest—unless they qualify for an exemption assuring that the customer is protected in some way. Investment decisions that fall under the rule can include, but are not limited to, what assets to purchase or sell, and whether to rollover from an employer-based plan to an IRA.

To be sure, this does not mean that advisors can no longer sell commissioned products, like variable or index annuities. But to do so, in most cases advisors will have to obtain a form known as the ‘Best Interest Contract Exemption’ (BICE), and have it be signed by the client and the advisor’s firm.

A White House Council of Economic Advisers analysis found that conflicts of interest that arise from an advisor being able to recommend proprietary products (or other products recommended for the sake of commissions versus the best interest of a client) result in annual losses of about 1 percentage point for affected investors—or about $17 billion per year in total. Perhaps the new law will change that going forward.

### Moving Forward: What Investors Should Look Out For

The rule changes don’t take effect in their entirely until January 1, 2018, so retirees should not expect to see much change—if any at all—in how your retirement accounts are handled. If you're shopping for a new financial advisor, ask them if they are held to a Fiduciary Standard. It's one of the many recommendations we offer in our** [**Guide to Finding a Better Financial Advisor**](https://www.letsassemble.com/your-guide-to-finding-a-better-financial-advisor). **In response to the rule, however, many advisory firms are considering re-evaluating their service models and what products they offer to clients. In all, the new rule is expected to continue shaping the advisory business away from the commission-based model, and more towards the fee-only model.

At [WrapManager](http://www.wrapmanager.com), we already adhere to the fiduciary standard, meaning we put our client’s interests before our own. Our advice to retirees is to ask your current advisor if they already adhere to the fiduciary standard, and if they don’t, you should ask why.

If you have any questions, please give us a call today at  1-800-541-7774 or send us a note to wealth@wrapmanager.com.

[Click here see the latest blog posts on the Fiduciary topic.](http://www.wrapmanager.com/wealth-management-blog/topic/fiduciary)

---

 

Source:

1. [Department of Labor](http://www.wrapmanager.com/hubfs/PDF_Blog_Sources_/DOL.pdf)

2. [FA Magazine](http://www.wrapmanager.com/hubfs/PDF_Blog_Sources_/FA_Magazine.pdf)

3.  [Think Advisor](http://www.wrapmanager.com/hubfs/PDF_Blog_Sources_/Think_Advisor.pdf)

  

[Investment Plan](https://www.letsassemble.com/wealth-management-blog/topic/investment-plan) [Fiduciary](https://www.letsassemble.com/wealth-management-blog/topic/fiduciary)

[![Retirement-planning-strategy-ebook-CTA-large](https://no-cache.hubspot.com/cta/default/10700/cabe7a81-5886-482b-b69a-f18d67190c25.png)](https://cta-redirect.hubspot.com/cta/redirect/10700/cabe7a81-5886-482b-b69a-f18d67190c25)

### Subscribe to Updates

[Subscribe to RSS Feed](https://www.letsassemble.com/wealth-management-blog/rss.xml)

[![New Call-to-action](https://no-cache.hubspot.com/cta/default/10700/ffe2a394-957b-481b-9f80-4ef176bd6aaf.png)](https://cta-redirect.hubspot.com/cta/redirect/10700/ffe2a394-957b-481b-9f80-4ef176bd6aaf)

### Most Recently Published

### Blog Authors

[![Gabriel Burczyk](http://www.wrapmanager.com/hs-fs/hub/10700/file-2347381761-jpg/Athors_Avatars/Gabe-avatar.jpg "Gabriel Burczyk")](http://www.wrapmanager.com/wealth-management-blog/author/gabriel-burczyk)

[**Gabriel Burczyk,**](http://www.wrapmanager.com/wealth-management-blog/author/gabriel-burczyk)  
[Founder & CEO](http://www.wrapmanager.com/wealth-management-blog/author/gabriel-burczyk)

[![Valerie De Vol](http://www.wrapmanager.com/hs-fs/hub/10700/file-2457588837-jpg/Athors_Avatars/Valerie-De-Vol-avatar.jpg "Valerie De Vol")](http://www.wrapmanager.com/wealth-management-blog/author/valerie-de-vol)

[**Valerie De Vol, **IACCP®  
Chief Operating Officer](http://www.wrapmanager.com/wealth-management-blog/author/valerie-de-vol)

[![Seton-avatar.jpg](http://www.wrapmanager.com/hs-fs/hub/10700/file-2344519198-jpg/Athors_Avatars/Seton-avatar.jpg "Seton-avatar.jpg")](http://www.wrapmanager.com/wealth-management-blog/author/seton-mcandrews)

[**Seton McAndrews, **CFP®  
](http://www.wrapmanager.com/wealth-management-blog/author/seton-mcandrews)[Vice President - Investments](http://www.wrapmanager.com/wealth-management-blog/author/seton-mcandrews)

[![Doug Hutchinson](http://www.wrapmanager.com/hs-fs/hub/10700/file-2347381751-jpg/Athors_Avatars/Doug-avatar.jpg "Doug Hutchinson")](http://www.wrapmanager.com/wealth-management-blog/author/doug-hutchinson)

**[Doug Hutchinson,](http://www.wrapmanager.com/wealth-management-blog/author/doug-hutchinson) **[CFA®  
](http://www.wrapmanager.com/wealth-management-blog/author/doug-hutchinson)[Director of Research and Trading](http://www.wrapmanager.com/wealth-management-blog/author/doug-hutchinson)

![Katie - square.png](https://www.wrapmanager.com/hubfs/Katie%20-%20square.png "Katie - square.png")

[**Katie O'Connor  
**Director of Client Services](https://www.wrapmanager.com/wealth-management-advisors/katie-oconnor)

**Important Disclosure Concerning WrapManager Blogs**

Blogs found at this site have been created or supported by WrapManager. The information provided in a blog post prepared by WrapManager or an associated person of WrapManager is generally limited to financial and economic issues, but may include a discussion of general interest items. The views and opinions expressed on this blog are purely the blog authors, and not necessarily those of WrapManager, Inc. Certain blog posts include information pertaining to WrapManager’s investment advisory services and the products and services of unaffiliated money managers. Such information is provided for information purposes only. Accordingly, information provided in a blog should not be construed by any consumer and/or prospective client as a solicitation to effect or attempt to effect transactions in securities or the rendering of personalized investment advice. Any subsequent, direct communication by WrapManager with a prospective client shall be conducted by a representative of WrapManager. Moreover, no client or prospective client should assume content contained on the website serves as a substitute for personalized advice from WrapManager. Different types of investments involve varying degrees of risk, and there can be no assurance that any investment, portfolio or money manager referred to within the blog will be suitable for your individual situation and risk tolerance or will be profitable. WrapManager recommends that you retain a financial professional to provide you with specific guidance regarding your financial situation before investing. Investment in equity strategies involves substantial risk and has the potential for partial or complete loss of funds invested.

Although the information included in the WrapManager, Inc. website and blog has been obtained from sources WrapManager believes to be reliable, we do not guarantee its accuracy and information may be subject to change without notice. This website should not be regarded as a complete analysis of the subjects discussed. Information on this site should not be relied upon as a substitute for legal, tax or accounting advice by a professional in your local jurisdiction.

Comments made by third parties are subject to moderation by WrapManager and may not appear on this blog until they have been deemed appropriate for posting. Also, due to the volume of comments received, not all comments will be posted.

WrapManager does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party website linked to WrapManager's web site or incorporated within a blog post. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.

 

 

```json
{
  "@context" : "https://schema.org",
  "@type" : "BlogPosting",
  "author" : {
    "@type" : "Person",
    "name" : "Michael J. O'Connor",
    "url" : "https://www.letsassemble.com/wealth-management-blog/author/michael-j-oconnor"
  },
  "datePublished" : "2016-05-25T14:30:00.000Z",
  "headline" : "The Definition of Fiduciary Matters: Here’s Why",
  "image" : [ "http://www.wrapmanager.com/hubfs/blog-files/Trusting_your_Financial_Advisor.jpg" ],
  "mainEntityOfPage" : {
    "@id" : "https://www.letsassemble.com/wealth-management-blog/the-definition-of-fiduciary-matters",
    "@type" : "WebPage"
  },
  "publisher" : {
    "@type" : "Organization",
    "logo" : {
      "@type" : "ImageObject",
      "url" : "https://www.letsassemble.com/hubfs/Assembly/logos/Assembly-Wealth-Logo-Orange-500px.png"
    },
    "name" : "Assembly"
  }
}
```