New Regulations for Investors

Photo by Daniel Smyth

Until recently, it was common for a client’s interest and return on investment to take a backseat to a stock brokers’ own quest for personal profit.

Earlier in 2016, the United States Department of Labor (DOL) changed all that by introducing new regulations that would ensure the investors would come first when it came to investing, IRAs and 401K rollovers.

“In essence, the regulations layout that anyone working with IRA assets or rollover assets must be a fiduciary,” explains Drew Horter, president, founder and chief investment strategist of Horter Investment Management, LLC. “This is a significant difference for a lot of stock brokers and insurance agents.

“Before, representatives had a ‘suitability standard’ that allowed them to sell you a product that wasn’t necessarily in your best interest.”

The suitability standard made brokers give advice and recommendations on what they reasonably believed were best for their clients. However, brokers who held to the suitability standard may have been more loyal to the company they work for and not their client.

On the other hand, the fiduciary standard requires advisers to put their clients’ interests ahead of their own. 

Many firms, like Horter, have always followed the fiduciary standard.

“A lot of the other advisers might not want to switch to the fiduciary fee-based transactions over their current way of doing business that can earn them high commissions,” says Horter. “Experts believe that 30 to 40 percent of advisers will leave the industry instead of adhering to the new DOL regulations.”

Horter and his team will have to make some adjustments, too.

“We have always put our clients’ interest before our own,” explains Horter. “With the new regulations, we do have to update some of our forms, but our changes aren’t nearly the magnitude a lot of our competitors will have.”

Even though the regulations are aimed to better protect investors, Horter notes that there are still some things investors should know.

“The advice I would give to any investor out there would be to sit down with their adviser and ask them if they are a fiduciary and following all of the new rules regarding IRAs and rollovers. If they don’t, they are in violation.”

Another way the new DOL regulations may affect investors is that some firms and brokers may raise the minimum amount of assets a client must have.

“For those clients that may no longer fit the brokerage business model, they may fit very well with Horter,” says Horter. “We serve the middle market and upper-middle market.”

Horter Investment Management recently celebrated the opening of their new national headquarters located on Mason-Montgomery Road in Symmes Township.

“We needed more space to continue our national growth,” explains Horter. “We are all over the country – from Hawaii to Maine. We have 350 advisers right now and want to add up to 100 more.

“In the building, we currently have around 30 employees and are looking to hire upwards to 90 employees in the coming years to handle our firm’s continuous growth.”

Their first building now serves as their local adviser office that allows Horter to increase its presence in Cincinnati.

“It’s important to me to teach our Cincinnati investors about low-risk and low-volatility portfolios. We want our clients to not simply trust us, but really understand what it is we’re doing because it’s different than what you’ve been taught about investing for the last 30 years. We don’t just buy low and sell high,” smiles Horter.

“Significant losses for our clients are unacceptable to us. We want them to make money if the market is up or down or if interest rates are climbing or going down.”


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