President Trump Wants to Rescind the Fiduciary Rule – Part 2: How Does This Affect You?

Rescinding the fiduciary rule. How does this affect you?



  • Whether or not the fiduciary rule is enforced, you can keep your 401(k) plan costs reasonable through proper evaluation and benchmarking.
  • Advisor fees should be understandable, transparent, and documented in your investment advisory agreement.
  • Registered investment advisors are fiduciaries and must act in the best interests of the clients and accounts they manage.


As I discussed in my last post, President Trump recently signed an executive action asking the Department of Labor (DOL) to delay, or consider rescinding its fiduciary rule set to go into effect in April. Again, the DOL’s fiduciary rule would formally require brokers and other commission-based advisors to act in the “best interests” of their clients. Sounds pretty reasonable, right? What’s more, many of the nation’s largest financial services providers were making great strides to comply with the new fiduciary rules, even if it meant a loss of profits in the short-term.

It’s unclear when the fiduciary rule will be enacted, if at all. And some major brokerage firms and wirehouses may be balking at measures promised to comply with the new rules – rules designed to protect investors. Regardless of the outcome, if you are an investor and/or small business owner, you don’t need to make drastic changes to your 401(k) or other retirement plans to protect yourself and your family. However, you do need to understand your options and costs so that you can make the best possible decision.


Back when I was a partner at a CPA firm, we provided third-party administration services for 401(k) and profit sharing plans. As a third-party administrator, our responsibility was to account for plan assets, report to participants, and file the appropriate tax forms with the DOL. While working on these plans, I noticed that many times the investment options seemed expensive for plan participants and lacked an appropriate list of mutual funds one would need to build a diversified investment portfolio. Plan fees were not only expensive, but confusing and lacking in transparency.

As far back as 2002, I recognized this issue and began providing retirement plan investment advisory services that included low cost, diversified portfolios, and a fully disclosed investment advisory fee schedule.

The DOL also recognized this issue and prepared two rules to address the matter. The first rule, implemented in 2012, ensured workers were given adequate information to make informed decisions about fees and investment performance. The DOL’s second action was the hotly debated fiduciary rule, scheduled to be enforced in April. Again, the fiduciary rule would have required ALL retirement plan advisors to put the best interests of their clients first. The main goal of the fiduciary rule was to curtail the practice of offering investors financial products that had the highest fees and commission structures, not necessarily the products that best met the investor’s needs and objectives at the time.

While it hasn’t been an easy transition for many in the industry, all indications showed that positive steps were taking place and that brokerages were implementing plans to reduce their fees and add transparency to their pricing. However, very late in the game, President Trump signed an executive action asking the DOL to delay or consider rescinding its fiduciary rule.


Whether or not the fiduciary rule is implemented, it shouldn’t impact investment options available under 401(k) plans. Business owners and investors have choices and should select a 401(k) plan advisor and investments based on answers to important questions like these:

  1. Is the plan advisor a fiduciary required to act in their client’s best interest? Better yet, will they act as a Section 3(38) fiduciary taking responsibility for the selection and monitoring of the plan’s investment options?
  2. Are plan fees and advisor compensation transparent and clearly spelled out in agreements?
  3. Are plan fees and advisor compensation benchmarked to industry norms? There are several benchmarking services that provide information on plan fees.
  4. Are investment options diversified, low-cost, and easy to understand?
  5. Are participants given the appropriate information and education to make informed investment decisions?

According to Brightscope research, time-pressed business owners are particularly vulnerable to accepting high-fees or a less-than-ideal menu of investment options.

If you are unsure if you’re getting the best advice possible from your broker or another financial adviser, please feel free to contact us.


Todd Flynn, CPA, CFP ® is a Principal at Soundmark Wealth Management, LLC. Todd works closely with physicians, business owners, and other high-net-worth individuals to help them define their financial goals and implement an ongoing financial planning process.