Understanding the Department of Labor’s Fiduciary Rule

 

The Department of Labor is currently working on a new Fiduciary Rule, expected to become fully effective in January 2018. The rule will require financial services institutions providing advice to retirement investors to act in the client's best interest when they provide recommendations for a fee or other compensation.

Scottrade has always been committed to helping clients meet their goals, but not all firms can say the same. To show that Scottrade is here for you, we’ve included some information and frequently asked questions that our clients, and all investors, should consider.

  • We don’t distribute our own securities. Our focus is on you.
  • We won’t be limiting your investment choices or changing our business model.
  • We make it easy to understand what you’re paying in fees and commissions.
  • We have always made investors feel welcome and that continues today – we take the time to listen.

FAQs

  • Scottrade does not offer proprietary securities. We believe offering choice and transparency into what is already available in the marketplace is most important. Contrary to many competitors, you can select solutions based solely on what’s best for you.

    Scottrade does offer a bank sweep program, which provides clients with FDIC coverage on cash balances held in their brokerage accounts. Two affiliates of Scottrade’s parent company are banks in this program. Clients may elect to use this feature in their self-directed accounts and determine for themselves if it is the right solution for their individual situation. Clients are notified of their participation in the program, and may opt out at any time.

  • Scottrade Investment Consultants receive base compensation and are eligible for additional compensation based on client assets and service. They do not provide and therefore do not receive compensation for individual security recommendations. If a client is suited for a referral to our registered investment advisor, Scottrade Investment Management, an Investment Consultant may be eligible for additional compensation, but the solutions presented by SIM are always based on what is right for the client and the client makes the final decision. As a fiduciary, Scottrade Investment Management always acts in a clients’ best interest.

  • If you are in a self-directed account, you decide how and when to rebalance, and commission costs may apply. Scottrade provides tools like the Portfolio Review Tool to help you know when to rebalance.

    For clients who have been referred to a registered investment advisor through Advisor Access, the advisor would rebalance clients’ accounts as appropriate, and commissions may be charged.

    For Guidance Solutions Managed Accounts, independent portfolio managers rebalance as they deem appropriate, based upon market conditions. The portfolio managers’ compensation is not based upon the number of transactions in your portfolio. Clients do not incur any additional commission costs in a Guidance Solutions managed account as a result of rebalancing; those costs are included in the overall management fee.

  • Scottrade’s business model continues to support the current regulatory environment and no major changes are planned. We are continually taking steps to ensure we are in compliance with all relevant regulations, and to that end, we are adding information to our website and our retirement account agreement to further clarify areas impacted by regulatory changes. We welcome these enhanced industry-wide regulations because this brings transparency to investors everywhere.

  • Scottrade brokerage has not been held to either standard, because we have not made securities recommendations. When the Department of Labor fiduciary rule takes effect, Scottrade brokerage will serve as a fiduciary when making recommendations to clients regarding the rollover or transfer of a retirement account.

    Scottrade Investment Management, a registered investment advisor through which we offer managed accounts and referrals to registered investment advisors, will continue to be a fiduciary for all account types.

  • Scottrade was founded on a belief of doing the right thing for clients. Our Investment Consultants are trained to help their clients and we built our compensation structure with that goal in mind. In the future, when the fiduciary rule takes effect, we will deliver a written notice communicating that Scottrade will act in clients’ best interests when we make a recommendation regarding a rollover or transfer of retirement account assets. For non-retirement accounts, clients who use products and services from Scottrade Investment Management can be assured they are working with a fiduciary that must act in their best interests. For self-directed non-retirement accounts, Scottrade Investment Consultants are there to help you make the decisions that are right for you.

  • Scottrade’s Brokerage Commissions & Fees schedule can be found on this simple one-page document.

    The management fee charged on Guidance Solutions Managed Accounts is inclusive of all fees charged and can be found in the Scottrade Investment Management Brochure.

    Clients who are referred to a third-party registered investment advisor through Scottrade Investment Management should ask these same questions of their advisor. As a fiduciary, a registered investment advisor is required to act in their clients’ best interests.

The management fee charged on Guidance Solutions® Managed Accounts is inclusive of all fees charged and can be found in the Scottrade Investment Management™ Brochure.

Clients who are referred to a third-party registered investment advisor through Scottrade Investment Management should ask these same questions of their advisor. As a fiduciary, a registered investment advisor is required to act in your best interests.

Any specific reference to securities or account types or assets used as examples are for demonstration and informational purposes only. None of the information provided should be considered a recommendation or solicitation to invest in, acquire, hold or liquidate a particular security or type of security or other investment property. None of the information provided should be considered a recommendation as to how investment securities or other investment property should be invested at any time.