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New Rules for Retirement Brokers Take Effect in April 2017

Do you have a retirement account in a 401(k) or IRA? If so, a new rule from the Department of Labor may change your relationship with your broker.

Starting in April 2017, brokers will have to act as a fiduciary when they provide retirement-related advice. This means that brokers will have to put their clients’ interests first.

Currently brokers are governed only by a “suitability” standard, meaning they only have to consider whether a particular investment is appropriate for an investor.

But the new rule will require that brokers not consider their own compensation when recommending investment products to clients, and it will limit brokers’ compensation to what is considered “reasonable.” Also, brokers will have to make clients aware of their right to obtain information on the fees they’re being charged.

Industry experts anticipate the rule will cause many brokers to adopt a set fee approach to compensation, rather than a model that is based on commissions and/or transaction-based compensation.

The new rule is designed to protect middle class investors who typically hold most of their investments in retirement-focused accounts, such as 401(k) accounts or IRAs.

Williams Dirks Dameron protects investors in broker-related claims, as well as other types of claims related to investments and securities. To learn more, contact Matt Dameron at or (816) 876-2600.

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