New Department of Labor Fiduciary Rule

If you own an IRA or participate in a 401(k) plan, please read this document.

The Labor Department has issued new rules for tax-advantaged retirement accounts. Potentially, they affect anyone who has an IRA or a 401(k) account. They also impact IRA rollovers, and any investment recommendations that may be made pertaining to distributions from IRAs and 401(k)’s.

Under the new rules, any financial services industry professional who makes investment recommendations to employees participating in a 401(k) plan, employers who sponsor a 401(k) plan, or IRA owners in exchange for compensation will be considered a fiduciary.1

The Labor Department has expanded its definition of “fiduciary” to reduce the chances of conflicts of interest affecting relationships between financial professionals and investors. In particular, it wants to diminish any potential conflict that may emerge related to the possibility of a commission from an investment transaction.

Because of these new rules, many financial professionals will be encouraging their clients to enter a fee-based advisory relationship. In such a relationship, financial advice is provided to the client only in exchange for an advisory fee. That fee may be hourly, it may be per-project, it may be a quarterly or yearly retainer fee, or it may be an annual fee equivalent to a tiny percentage of your account value.

What this means for you, our client. The new rules will have little to no effect on how Prentice Wealth Management administers your accounts. PWM has been operating under a fee-based model for several years and has been filed as an independent Registered Investment Advisor since 2012. In the future, you will likely see additional disclosures in the Wealth Management Agreement per any new guidance. Prentice Wealth Management is pleased to see the industry as a whole moving toward the business model we have long embraced.

We will keep you updated as further details emerge. These new rules are being rolled out gradually. The above-mentioned fiduciary standard takes effect in the spring of 2017, and all of the new rules will be fully implemented beginning in 2018.1

You can be assured that these new rules will not affect your account values. You may have a question or two about all this, and we welcome the chance to talk to you about it. If you have questions or concerns, please call us at 585.218.0001 or email us at

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