Welcome to MutualFunds.com. Please help us personalize your experience.

Select the one that best describes you

Your personalized experience is almost ready.

Join other Individual Investors receiving FREE personalized market updates and research. Join other Institutional Investors receiving FREE personalized market updates and research. Join other Financial Advisors receiving FREE personalized market updates and research.

Thank you!

Check your email and confirm your subscription to complete your personalized experience.

Thank you for your submission, we hope you enjoy your experience

DOL fiduciary rule

Category

The New DOL Fiduciary Rule



Fees pertaining to A shares, C shares, expense ratios, commissions and advisory services need to be fully disclosed. As a result, all the concerned entities are scrambling to comply by the April deadline.


Impact on Mutual Fund Providers


For mutual fund companies, this puts immense pressure on reducing expense ratios to compete with other lower-cost financial products. Many retirement plans are currently reevaluating the funds they provide to their participants to ensure that they are the best available options. In fact, some of them have decided to add ETFs to offer lower-cost options to their participants. For instance, Schwab now offers 401(k)s with a choice of either mutual funds or its Schwab Index Advantage ETFs. Make sure to find out the questions that you need to ask when purchasing mutual funds before making your decision.


Impact on Mutual Fund Investors


This will now be under great scrutiny, as professionals must disclose that a client has the right to stay in the plan, which will most likely have much lower internal costs or fees. If there is no value in lieu of fees, the professional is not acting in the best interest of the client. Therefore, mutual fund investors will be better educated on how investment fees are charged and measure the differences between any existing or new funds and their lower-cost alternatives.

The negative aspect of the rule is that now investors will have limited access to investment options and advice. Already, several brokerage firms are adjusting their retirement business for only higher account valued clients because lower accounts are not worth the risk of non-compliance of the rule.

Moreover, clients that decide to stay in a retirement plan can experience lower fees, but will not receive any ongoing advice, which can potentially cause more harm. With retirement plans also looking to comply with the rule, the investment options will be limited within the plan in an effort to minimize fees. Check the various costs attached to mutual funds before you start to invest.


The Transition Process


Moreover, brokerage firms and investment advisors are also increasing the account size of clients with retirement accounts, so clients with smaller accounts might be transitioned to other advisors.


Bottom Line



Robo Advisor Image

The New DOL Fiduciary Rule

The Rise of Robo-Advisors


Insurance Agent DOL Ruling

The New DOL Fiduciary Rule

What This Means for Insurance Agents


Fiduciary Duties

The New DOL Fiduciary Rule

What This Means for Advisors and Broker-Dealers


DOL fiduciary rule

The New DOL Fiduciary Rule

What This Means for Investors