Important Industry Update
I am writing you today to share a situation that has been brewing on capital hill for some time and is getting very close to becoming a reality. The Department of Labor wants to change the way an American works with their financial advisors regarding IRA accounts. We at Beacon Financial Group are able to do both fee based and commission based programs, and currently there is freedom of choice for the product a client and advisor can choose. Some clients feel it is appropriate to have a fee based relationship and others feel the commission program is more suitable. Most likely this will end soon as a ruling is currently being finalized by the Department of Labor to change this structure. It is very likely that advisors and clients may be limited to products and may need to change the current relationship that exists with an advisor helping you with a retirement account.
I have always believed that there was democracy in this country and a very thorough process with checks and balances for a ruling or a law to be passed. It was my understanding that thoughtful debate and hearing opinions from all sides would determine the proper outcome. Additionally, our leaders would have the ability to listen to their constituents and share those opinions with the rule makers before a final decision was made. The current status of the proposed regulation feels like it has been done very quickly. the proposal was filed with the Office of Management and Budget (OMB) on January 28, 2016 and the OMB is expected to respond in less than the 90 days permitted under the law. It will then be posted in the Federal Register with an effective date that is no less than 60 days after publication to allow for Congressional review.
Ironically, The majority of advisors I speak to as well as almost every client who has an IRA account is totally unaware of the potential "game changer" being proposed by the U.S. Department of Labor. They are proposing that all IRA accounts need to fall under the DOL's Fiduciary standard for retirement plans under the ERISA act of 1974. What that means to you is any IRA account that you have, whether it is managed at Beacon Financial Group or somewhere else may need to change. It may even go so far to say that the advisor or firm that you are working with cannot continue to provide advice to you on specific, existing products or programs. There is also a chance that some investments will never get an exemption or be an "approved" investment according to DOL and may need to be liquidated or removed from the IRA. It has always been our philosophy, at Beacon Financial Group, to support the clients right to choose their investment options and how to pay for it.
As of now, the final ruling is expected later this month or early April and it is premature to predict exactly what will happen with client accounts. Regardless of what comes out from the DOL in the next month or so, BFG is working hard with our current product sponsors and NPC to come up with solutions to help make our relationship with you seamless.
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Stephen C. Locker, CFP
Chief Executive Officer
Beacon Financial Group
The opinions voiced are for general information only. They are not intended to provide specific advice or recommendations for any individual and do not constitute an endorsement. There are no guarantees that any managed portfolio will meet its intended objective. Neither diversification nor asset allocation can ensure a profit or protect against a loss. Past performance is not indicative of future results.
We sincerely appreciate you as a client and look forward to servicing all of your financial planning needs. We would appreciate you sharing this newsletter and our services with anyone whom you think may be interested!
Beacon Financial Group
101 Town Center Dr. Suite 111 Warren NJ 07059
Securities and advisory services offered through LPL Financial, a Registered Investment Adviser. Member FINRA/SIPC.
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