Amid the wild political news capturing the headlines, you may have missed some recent good news in the advisory world. Back in April, the US Department of Labor announced that it is extending fiduciary protections to include IRAs. The change will take effect this year on September 23rd. This means that for the first time ever, even advisors who are not registered investment advisors (RIAs) will be required to put their clients’ interests first when managing assets in IRAs.
To understand what this means to you, it’s important to first look at the definition of a fiduciary.
In short, a fiduciary is a person (such as your advisor) or organization (such as Leisure Capital Management) who acts on your behalf, always putting your interests ahead of their own. In the financial advisory world, this means that a fiduciary advisor is ‘legally and ethically obligated’ to make decisions that are best for each client, rather than for their own benefit due to higher commissions or other compensation. This duty of loyalty and care ensures that every recommendation is aimed at achieving your financial goals.
At Leisure Capital, we have always adhered to this client-centered approach to financial advising. As an RIA, we are bound to do so. As your dedicated financial team, we wouldn’t choose to do it any other way. Unfortunately, that has not been the case for all advisors. That’s precisely why we feel this change is so important.
What prompted the change?
As you know, baby boomers (perhaps you included) have created the largest retirement wave in history. With pensions generally a thing of the past, most baby boomers’ retirement assets have been held in 401(k)s—highly regulated accounts that already benefit from fiduciary protections. As a result, the boomer retirement wave has driven a massive number of 401(k) rollovers into non-regulated IRAs. According to a Council of Economic Advisers analysis, in 2022 alone, Americans rolled over about $779 billion from workplace retirement plans into IRAs—nearly double the amount rolled over in 2010. Sadly, while retirees were busy celebrating their golden years, unscrupulous advisors with no fiduciary requirement (think stockbrokers and insurance agents) were also busy, in this case recommending investments based not on strategies to help protect their clients’ large nest eggs, but instead based on which products would put the highest commission in their own pockets.
Though fiduciaries like us have tried for years to warn investors about this practice, the impact has been devastating to retirees and others who lacked fiduciary guidance. The Government Accountability Office (GAO) estimates that conflicted advice has cost IRA investors as much as $17 billion in lost returns every year. To protect investors from these unnecessary losses, the new fiduciary rule requires all advisors—including stockbrokers and insurance agents—to act as fiduciaries when making IRA recommendations. From September 23 forward, all recommendations must be based solely on each client’s best interests.
The RIA standard of excellence
As an RIA, this standard of excellence has always been a cornerstone of our practice. At Leisure Capital, we have consistently upheld the highest standards of fiduciary responsibility—whether it was a regulatory requirement or not. Our commitment to transparency, integrity, and client-first principles remains unwavering. In recognition of this dedication to excellence, we were recently honored to be ranked among the top RIAs in the country by Financial Advisor magazine in this year’s RIA Survey & Ranking. It’s a badge of honor we are extremely proud to wear!
As of 2024, there are over 15,000 RIAs in the US, collectively managing ~$128 trillion in assets. To be ranked at #321 nationwide is a great achievement for us, especially considering that many firms of our size have grown not through organic success, but through mergers and acquisitions. Here are just some of the benefits our RIA commitment and the new fiduciary rule bring to you as a valued client:
Our fiduciary duty means that every recommendation, strategy, and decision we make is designed to serve your best interests. Period. Our long-standing adherence to these principles means you already benefit from the highest level of care and ethical standards. The new fiduciary rule will extend this standard across the industry, hopefully boosting investor confidence so those who need guidance will seek it out knowing they will receive the best possible advice.
With the new regulation comes a shift toward greater transparency across all advisory services. Though we do anticipate some additional compliance requirements (perhaps a bit more paperwork when rolling over assets into an IRA), transparency with our clients is a key part of our philosophy of clear, open communication. Making this an industry-wide requirement should build even greater trust in the financial planning process.
As you can see, the new fiduciary rule will change very little here at Leisure Capital. The new rule simply ‘codifies’ what we already do. That said, as we celebrate being named one of the top RIAs in the country, we want to take this opportunity to reaffirm our commitment to you. Our ranking is not just a testament to our expertise and dedication, but also to the trust you place in us. Your financial goals are our priority, and you can always count on us to maintain the high standards you have come to expect and deserve. Thank you for your continued trust and partnership!
