Recently, there has been extensive media coverage regarding the new Department of Labor (DOL) Fiduciary ruling pertaining to retirement accounts. The impetus behind this ruling is to protect investors. For many Americans, retirement savings are their largest investment, and the government wants to make sure that Americans’ nest eggs are not hurt by advisors who make investment decisions that are not in their client’s best interest.
What to know about fiduciaries:
- A term used frequently in the ruling and in the media is FIDUCIARY.
- Fiduciary is a legal term that, in this case, means that an investment advisor must always place the interests of their client above their own personal interests (financially or otherwise).
- It includes a duty of loyalty and care, and most simply means that the advisor must always act in the “best interest of his or her client. “ A lower standard allowed by the Securities and Exchange Commission (SEC) utilized by non-fiduciaries is simply whether an investment is “suitable for clients.”
- With this ruling, the DOL wants to make sure individuals are working with a retirement and investment advisor that is meeting the higher duty to make decisions in their client’s best interest, and not only offering investments which are simply deemed “suitable.”
- Being a Fiduciary is an important legal and moral commitment to the client.
- Not all investment advisors meet the standard of being a Fiduciary. This is why the DOL is trying to institute this ruling, so that everyone will meet this standard in working with clients.
Therefore, you may wonder: “Is the Trust and Wealth Management division within Hills Bank considered a Fiduciary?” The answer is YES, Hills Bank Wealth Management is a Fiduciary!
The Trust and Wealth Management division has always been classified as meeting Fiduciary standards:
- This is not a new fad for us or something we are just now doing. We are not scrambling to come into compliance with the new rules, because, for generations of service, we have upheld this high standard for our clients!
- Importantly, Hills Bank Trust and Wealth Management Officers’ compensation is not commission based, thus eliminating conflict of interest to “sell” a “product,” thus maintaining the integrity of being a fiduciary.
- Everyone within the department will always make sure that their decisions, suggestions, and advice are “in the best interest” of the client.
Our Investment Committee works hard to select high quality mutual fund managers with a strong track record, established performance, and lower than average internal expense ratios. Wherever possible, we utilize the lowest cost share class of the funds with no upfront loads, sales commissions, or fee kickbacks.
In fact, recent mutual fund changes in our investment models will lower internal expense ratios for accounts even further. This is important because lower internal expense ratios help in improving performance, which, to use the terms of a fiduciary, is in the client’s best interest.
We welcome the opportunity to discuss your retirement and non-retirement accounts with you. We are available to meet with you in Johnson, Linn, and Washington counties.
3905 Blairs Ferry Rd. NE
590 W. Forevergreen Rd.