When a financial professional provides investment advice, one of two different standards applies:
1. the recommendation is “suitable” for the client; or
2. the recommendation is the in client’s best interest.
To the layman, the difference in these two statements may not seem like much, but to lawyers and regulators, there is a world of difference. Standard 1 has been in general use among stockbrokers. Standard 2 is the fiduciary standard and is the standard The Trust Company of Kansas has been following for the entire 28 years of its existence.
The Dodd-Frank legislation required the Securities and Exchange Commission (SEC) to study the pros and cons of putting all investment advisors on Standard 2, the fiduciary standard. The SEC never reached a final conclusion, but in the meantime, the Department of Labor (DOL) got into the picture with a ruling of its own. The DOL decided that Standard 2 would apply whenever investment advice was provided, with respect to qualified retirement assets, such as an IRA or an IRA rollover.
The DOL ruling was challenged in court, and it was invalidated in the Court of Appeals. The deadline for taking the matter to the U.S. Supreme Court expired on May 1, so the DOL’s fiduciary rule is effectively dead.
Then in April, the SEC proposed three new rules of its own in this area. The rules are intended to enhance investor protection while preserving investor choice. The emphasis is on disclosure, rather than imposing fiduciary duties on all those who provide investment advice. Comments will be accepted during the next 90 days and the rules might be finalized later this year.
Those in the trust industry are not affected by these developments, for the simple reason that we already are governed by fiduciary standards and always have been. You might say that we were the pioneers of fiduciary responsibility, a fact that we are incredibly proud of here at The Trust Company of Kansas.
At The Trust Company of Kansas, we help people. We promise to minimize the burden of wealth management and bestow the freedom to enjoy everything else. As fiduciaries, we’ll help you accomplish your financial goals now and for generations to come. From day-to-day management, to long-term planning, we stay focused on the financial aspects of your life, so that you can stay focused on your priorities. We ensure that goals are met by safeguarding and growing your assets, so that you may continue enjoying a lifestyle to which you and your loved ones have become accustomed. And we do so without receiving commissions. Your legacy begins and continues here.
The officers at The Trust Company of Kansas are always willing to discuss your financial goals and help you to create a plan that is well-aligned with your wishes. If you have a specific question about wealth management or trusts, please contact us at (800) 530-5254 or visit tckansas.com/contactus, and one of our Certified Trust and Financial Advisors will be happy to assist you.