New Rules Look to Raise Fiduciary Standards. We’ve Been There for Years.

By | Feb 14, 2019 |

A devotion to transparency ensures that our retirement plan clients get service free of hidden agendas.

UPDATE (July 9, 2020): The SEC’s Regulation Best Interest (Reg BI) standard took effect on June 30, 2020. In addition to Reg BI, the Department of Labor (DOL) has issued a proposal for a new fiduciary rule that would effectively mirror the requirements set forth in Reg BI.

Although the proposed DOL rule would represent a watered-down version of the previous fiduciary rule, we believe it moves the industry in the right direction by increasing the standards to which brokers and broker-dealers must maintain. However, if implemented, the rule would fall short of creating a standard equal to that of the regulation detailed in the Investment Advisers Act of 1940, the same standard to which Brighton Jones, a fee-only Registered Investment Adviser, has been held since our founding two decades ago.

Moreover, Reg BI and the DOL’s new fiduciary rule proposal only apply to “retail investors,” which can only be defined as individuals, not retirement plans. We serve as an ERISA 3(38) fiduciary for retirement plans. This is a standard and level of scrutiny that most brokers and broker-dealers cannot or will not take on.

Now is the best time to review your retirement plan to be sure that it has low costs, strong investments, an efficient design, and is ultimately helping employees achieve their goals. 

Original Article

Last year, the Securities and Exchange Commission (SEC) proposed an investment-advice rule that—if implemented—would alter the standard of conduct of broker-dealers and provide more clarity around the relationship between individual investors and their investment professionals. The SEC effort was prompted in part by the regulatory uncertainty generated by the Department of Labor’s 2016 “fiduciary rule,” one that was recently vacated by the Fifth Circuit Court of Appeals. In short, the SEC rule aims to hold financial advisors to a higher standard. At Brighton Jones, we’re already there.

The Highest Level of Fiduciary Responsibility

The Retirement Plan Advisory Group at Brighton Jones maintains an ERISA 3(38) position across our entire investment lineup. Most retirement plan advisors won’t take that level of fiduciary responsibility because they are afraid to take on the liability that comes with it. At Brighton Jones, adopting a complete investment fiduciary stance aligns with the original principles on which we were founded.

Our founders, Charles Brighton and Jon Jones, saw an opportunity to offer comprehensive advice across a client’s entire balance sheet and only receive compensation from our client. At the time, the financial advisory model was utterly broken—sales were paramount, not service. Far too many advisors pushed esoteric financial arrangements and limited investment options that would net them the highest commission.

From day one, Brighton Jones has delivered objective, fee-only advice our clients deserve. While transparency in the financial industry has improved in the two decades since our founding, we’re still ahead of the curve with our relentless focus on the most underrated business model in the world: do the right thing for your client and they will appreciate it.

Built-in Oversight

How does this relate to investments? We practice what we preach: our clients receive the same services, solutions, and investment options as those we offer within our own company retirement plan. What we’ve come to expect in our plan is what we deliver to our clients—it’s as simple as that.

This approach offers an added benefit: our own employees act as a feedback loop. If any of them spotted a feature that was not in their best interests, they would alert us to the problem! A devotion to transparency and getting it right ensures that both our employees and our retirement plan clients get service free of hidden agendas.

Nothing to Hide

Although fee disclosure became required by law in 2012, many service providers in the retirement plan industry publish multi-page documents with countless fee contingencies due to their murky revenue and fee-sharing arrangements. We have one number: the fee our clients pay us. We don’t have kickback clauses with other vendors and we don’t sell products.

For us, fiduciary responsibility is not defined by law—it’s the only way we have ever operated.

Reach out to our team of retirement plan advisors for a complimentary and independent fiduciary fee analysis of your current providers.

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Let’s talk

Whether you have a specific question, or you’re interested in learning more about how our approach can be tailored to your situation, we’d love to hear from you.