You may have seen those emails, online videos, or mailings that tell you how the government is about to take away your only shot at becoming a millionaire. They tell you to act now because this magical investment that has made celebrities and other wealthy people wealthy goes away after April 10, 2017. So, what happens on April 10th?
On April 10th, the new Department of Labor Rule is scheduled to become effective. What is this rule? The rule, put simply, automatically elevates all financial professionals who work with retirement plans or provide retirement planning advice to the level of fiduciary. A fiduciary is someone who must act in the best interests of their clients. Why do certain insurance agents or “advisors” want you to act now? The push to sign up for these 26(f) programs is a push to invest in insurance products that have been deemed not to be in a client’s best interest or are believed to create a conflict of interest for the advisor and client. In time, they will likely disappear or at least be altered in a way that better suits a client’s needs and possibly provides more benefits to a client. The push to invest in something like this is kind of like rushing out to buy a Ford Pinto in 1980 before they quit making one of the worst cars of all times! I doubt anybody regrets missing out on that.
The new rule from the Department of Labor will not cause a “Retirement Blackout” for anyone. In fact, the negative impact of the rule is very minor and most people will not see any impact from the rule. Maybe a little more paperwork and some minor tweaks to existing account but it’s all done to, expectantly, create a platform where advisors can provide accurate and quality advice to clients with minimal conflicts of interest.
No matter how many products or investments are eliminated, altered or improved through the Department of Labor’s Rule, you will have options for saving for retirement and living through retirement. Don’t worry and certainly don’t rush into something because you fear you’ll miss out on some once-in-a-lifetime miracle option. Real savings goals are achieved by saving and avoiding too good to be true promises. Oh, and my apologies to the Ford Pinto fans of the world. Hopefully I didn’t offend the three of you!
Written by Alex Vassey, a CERTIFIED FINANCIAL PLANNER™ at Vassey Financial Planning & Investments. With systematic planning and proven strategies, Alex Vassey helps families prepare for all stages of life from college savings accounts, to funding a busy and vital retirement, to handling long term care insurance needs. You can reach Alex via email at Alex@vasseyfpi.com or at his office, located at 140 Bountyland Road, Seneca, SC 29672.