1330 Orange Ave., Ste 302
Coronado, CA 92118
Read financial tips and market updates in our weekly newsletter
Copyright © 2002 – 2023 Orion Capital Management LLC • Coronado, CA
Disclosure: Orion Capital Management LLC (“Orion”) is an investment advisor registered with the U.S. Securities and Exchange Commission (SEC). The firm offers advisory services in the State of California and in other jurisdictions where registered or exempted. Registration does not imply a certain level of skill or training. The information on Orion’s website or in its distributed commentary shall not be directly or indirectly interpreted as a solicitation of investment advisory services to persons or entities of another jurisdiction unless otherwise permitted by statute. Orion’s individualized responses to consumers in a particular state in the rendering of personalized investment advice for compensation shall not be made without the firm first complying with jurisdiction requirements or pursuant to an applicable state exemption.
The information on Orion’s website or in its distributed commentary is not investment, tax, accounting or legal advice. Orion is not a tax advisor. For tax advice individuals should consult their CPA. This information is also not an offer or a solicitation of an offer to buy or sell any security, or to be construed as an endorsement of any company, security, fund, or other securities or non-securities offering. This information should not be relied upon in the making of investment decisions. All content on this site is for informational purposes only, and nothing herein should be construed as an investment recommendation. Opinions expressed herein are solely those of Orion, unless otherwise specifically cited. Material presented is believed to be from reliable sources, but no representations are made by our firm as to other parties’ informational accuracy or completeness. All information or ideas described on Orion’s website or in its distributed commentary should be discussed in detail with an investor’s personal financial advisors and legal counsel prior to implementation.
Past performance is no indication of future results. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested.
The information on Orion’s website or in its distributed commentary is provided “AS IS” and without warranties of any kind, either express or implied. To the fullest extent permissible pursuant to applicable laws, Orion Capital Management LLC disclaims all warranties, express or implied, including, but not limited to, implied warranties of merchantability, non-infringement, and suitability for a particular purpose.
Testimonials or reviews on Orion’s website are from current clients. Orion does not compensate for reviews or testimonials and has no material conflicts with clients offering reviews.
Orion does not warrant that the information on Orion’s website or in its distributed commentary will be free from error. Your use of this information is at your sole risk. Under no circumstances shall Orion be liable for any direct, indirect, special or consequential damages that result from the use of, or the inability to use, the information provided on this site, even if Orion or an Orion authorized representative has been advised of the possibility of such damages. Information contained on this site should not be considered a solicitation to buy or an offer to sell any security, or a recommendation to buy or sell any security in any jurisdiction where such offer, solicitation, or recommendation would be unlawful or unauthorized.
Schedule a quick introductory call with you and see if we would be a good fit for you.
DOL Fiduciary Rule: Why it Matters to You
While there has been no shortage of interesting headlines coming out of Washington D.C. in recent weeks, almost lost in the shuffle of everything else has been a very important tug-of-war going on that is of great importance to the investment industry and to people across the country who are trying to build their retirement nest eggs.
The Department of Labor’s Fiduciary Rule, created under the Obama administration, was set to become binding on April 10, 2017. Now, however, its status is in limbo as the new administration decides if it wants the rule at all. The DOL Fiduciary Rule states that any financial advisor recommending investments for a client’s retirement account is required to act in the best interest of that client. Taking on a fiduciary responsibility would represent a significant change for the investment industry, much of which is still commission-driven whereby financial professionals are paid to steer their clients into certain investments.
Should an Advisor be a Fiduciary or a Salesperson?
There are two main types of financial professionals who manage assets for clients: those who are held to a fiduciary standard and those who operate under a “suitability” standard. It is critically important for investors, if they have a professional helping them with their investments, to understand the type of professional with whom they are dealing. Knowing if an advisor is a salesperson or not will help clients to understand why certain products and funds are being recommended to them—and why certain other products are not being recommended. Financial advisors operating under a “suitability” standard means their recommendations must be suitable for a client’s circumstances, a condition that, by design, can be interpreted very broadly. Typically, advisors acting under the suitability standard can and do receive compensation from fund companies for placing specific funds with their clients. Fiduciaries, on the other hand, have a legal and ethical obligation to put their clients’ interests ahead of their own and receive no such compensation from the purveyors of investment funds or other products.
You might think, given the complexity and risk inherent in financial markets, that it would be required for financial professionals to put their clients’ interest ahead of their own. However, this is not the case at all. In fact, unbeknownst to most investors, much of the investment industry operates as a sales machine whose representatives have no fiduciary duty to clients. While there are of course many such representatives who care deeply for their clients and do right by them, there are also some bad apples who are more concerned with their own financial well-being than that of their clients. Brokerage firms, banks and insurance companies all have no obligation to put their clients’ interests first.
In our view, the commission-driven industry model is broken and does not serve the interests of investors. To understand how your advisor operates, simply ask if he or she is a fiduciary. If the answer is “no”, then ask your advisor how he or she is compensated for making investment recommendations for your account.
How Our Fiduciary Standard Protects You
Since our firm’s inception in April 2002, we have always operated under the fiduciary standard. We believe that the type of investment firm that most closely aligns the interests of the client with the interests of the advisor is a fee-only Registered Investment Advisor. We have always put our clients’ interest first and have never earned a single dollar in commission for placing an investment with a client. Our sole focus in on growing our clients’ portfolio using a strategy that is both comfortable for them and appropriate for their financial circumstances. Our clients understand that our only loyalty is to them—not to a fund company or a larger parent company.
We are an independent resource for our clients. Because our only goal is to grow our clients’ portfolios, we provide objective and straightforward advice about any investment a client is considering. To us, securities are merely tools that we use to pursue our objective of increasing the value of our clients’ portfolios. A few are worthwhile to own; the vast majority are not.
We are pleased that all of the discussion and debate about the DOL Rule has raised public awareness about how the investment industry works. The DOL Rule ups the ante for everyone in the investment advice business, including Registered Investment Advisors such as Orion that already operate under the fiduciary standard. We too will have additional know-your-client standards and protocols that we will need to implement and certain cost-comparisons that will be need to made explicit when investing our clients’ retirement account assets.
In the end, investors across the country stand to benefit from the DOL Fiduciary Rule. Forcing banks and brokerage firms to adopt a fiduciary standard when they provide retirement advice cannot help but improve both the investment outcomes for clients and the experience that clients have with their advisors. The DOL Rule, if it survives, will somewhat level the playing field (from a marketing perspective) between Registered Investment Advisors and brokerage firms, as both will be able to claim to be fiduciaries. Nevertheless, we believe the DOL Rule will benefit the great majority of retirement savers and therefore support its implementation.
Please do not hesitate to contact me if there is anything about the markets or your portfolio that you would like to discuss.
Join Our list!
Join our email newsletter list to receive more market updates and financial articles like this one.
Markets Not Toeing the Fed’s Line
In the opening weeks of 2023, equity markets here in the U.S. and around the world have performed well, signaling
Can the Fed Stick the Landing?
2023 Investment Outlook In 2022, inflation spiked around the world because of supply chain constraints, massive pandemic-era fiscal stimulus and
2022 Year-End Financial Checklist
2022 has delivered way more than its fair share of uncertainty and stress for investors. Taking stock of your complete
Peter Thoms, CFA, MBA