fiduciary-PAX.jpg

You should know this word: Fiduciary

Financial Planning Feb 6th, 2018 by: Darryl Lyons

What is a fiduciary? Why is this word important and subject to loud, arrogant arguments on Capital Hill? It isn't child hunger. It isn't healthcare. Yet, in April 2016, the Department of Labor announced a new rule called “The Fiduciary Rule.” The rule is still subject to litigation and Congress repeal, but if I had to place a bet, I would bet that it will stick.

 

But what is a fiduciary anyway? In relevant terms, it's when a financial advisor has an obligation to put your interests above theirs. Another approach would be a salesperson. A salesperson typically has an inherent conflict of interest and one with integrity must always balance a fair deal. A salesman must consider the balance between the commission paid and the cost the client incurs. A fiduciary must strive to avoid these conflicts of interests.

 

So, it makes sense that financial advisors should be fiduciaries, right? Yes, but there are indirect consequences of regulation. I'm seeing some of these consequences play out right now.

 

For example, one major financial-services company has requested that all of their clients move their accounts to a different strategy. Another major financial-services company rearranged the service model for all clients under $1 million. Most of the firms, however, are in a “wait and see” mode. They are letting their attorneys and business leadership figure out all of the options.

 

Regardless of how things play out, I believe you can expect two things in investment and financial related advice – major short-term disruption, and more fiduciaries and less salesman.

 

Hopefully, the end result is that this change will encourage more people to save for their future. Only time will tell if this rule will move American savers in the right direction.

 

Retirement Guide - PAX Financial

 

This material is provided by PAX Financial Group, LLC. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The information herein has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results.

Darryl Lyons

Darryl Lyons

CEO and co-founder of the PAX Financial Group, Darryl Lyons has been a licensed professional in the financial services industry since 1999. A lifelong Texan, Darryl began his career in the financial sector just one day removed from earning his bachelor’s degree in corporate financial management and accounting at St. Mary’s University. Throughout his career, he has won awards for recruiting and development from Fortune 100 companies. In January 2007, he chose to begin and develop his independent practice. He joined Andres Gutierrez and Joseph Schuetze to form the PAX Financial Group. Darryl also served as the Chairman for Brooks Development Authority. Shortly after his service, Mayor Julian Castro, named a park “The Darryl W Lyons Park” in honor of his service. He was named to the 2010 San Antonio Business Journal’s “40 Under 40 Rising Stars,” which honors people making a difference in business and in the community.