New rules imposed by the Department of Labor require anyone being paid to provide advice on retirement accounts must do the right thing for his or her clients.
The rules are likely to reduce costs and improve returns for savers and retirees, but they raise a new risk: investment sales people may use the term "fiduciary" as a marketing tool.
Under the law, a fiduciary must be impartial, seek diligently to avoid conflicts of interest, disclose any remaining conflicts, and always serve the best interests of their clients.
The rules don't oblige sales people to act on your behalf, nor do they prevent them from calling themselves "financial advisors" when they aren't registered.
Now almost everyone getting paid to handle a retirement account must act as a fiduciary, but it's up to investors to ensure that they behave like one.
When you can own the entire U.S. stock market for as little as 0.03 percent a year, it's odd that someone calling himself or herself a fiduciary would charge you many times that rate.
At Boston University, law professor Tamar Frankel says fees should be reasonable, but the law doesn't define that precisely. Advisors that recommend non traded securities are questionable and they may still have conflicts of interest. And some charge 1 percent even on clients' cash balances when clients could earn more on certificates of deposit.
The advisor to hire is one who thinks humbly and deeply about your interests.
