In Perspectives

In April, 2016, the Department of Labor (DOL) issued a long-awaited rule that would hold brokers and investment advisors to a “fiduciary standard” for the investment of IRA and 401(k) accounts. The basic focus of the rule was to move the brokers and other investment advisors from the “suitability standard” to the higher “fiduciary standard”, with the tenets of placing the interest of their clients before their own, avoidance of any conflicts of interest, and full transparency as to all expenses associated with the investment of funds.

We actually offered our opinion on this announcement in our April 2016 Perspectives http://www.legacygr.com/2016/04/26/the-government-takes-fiduciary-standard-to-main-street/.  As we noted, the fiduciary standard is nothing new to Legacy Trust, as we have been held to this highest standard since the inception of our firm.

The DOL Fiduciary Rule was slated to become effective on April 10 of this year and though the industry has resisted the imposition of this new standard, they have been reluctantly preparing for its enactment. Last Friday, the Trump Administration provided some short-term relief by issuing a memorandum temporarily halting the rule’s enactment and directing the DOL to review the impact of the rule and provide a recommendation to either revise the rule or rescind it altogether.

Why does all of this matter? Why is the industry resisting the imposition of this higher standard?  The answer lies in the rule’s mandates and the compliance reporting requirements to the DOL.  The assertion by the industry is that smaller investors could be harmed by the rule’s enactment  which requires mandatory compliance reporting.  Brokers, investment advisors, insurance companies and banks would be required to submit detailed reports on every account to document for the regulators that the new standards are being applied on a consistent and regular basis.  This adds costs to all in the industry and those costs are eventually passed on to the firm’s clients.  Opponents have argued that the added expense to investors could lead most advisors to raise fees, squeezing investment returns and pushing smaller investors elsewhere to lower cost, less personalized investment options.

The investing public is becoming more educated with the advent of new technologies and an abundance of investment data sources. Legacy Trust recommends investors become familiar with the principles of the fiduciary standard and be confident their current investment advisor adheres to this highest standard – not because they are mandated to comply with a government regulation, but because they embrace these tenets as the bedrock to a successful, long-term advisory relationship.

Legacy Trust and Your Right to Financial Privacy

At Legacy Trust we have established policies and practices that respect the financial privacy of all individuals who use our trust company. We believe it is critical to comply with the laws and regulations designed to secure your financial privacy. Your relationship with us as our client is very important to us, and we want you to understand our policies and practices about handling your information.

This Policy applies to you – This Policy applies to our relationships with individual clients who inquire about or obtain products or services from us for personal, family and household purposes.

Strict security measures – We take the security of information very seriously. We have established security standards and procedures to prevent access to client information. We maintain physical, electronic and procedural safeguards to guard client information.

Limited employee access – We have established procedures to limit employee access to information to only those employees with a business reason for accessing such information. We educate our employees about the importance of confidentiality and client privacy. We take appropriate disciplinary measures to enforce employee responsibilities regarding client information.

Why we collect information – We collect information about you to:

  • accurately identify you;
  • protect and administer your records, accounts and funds;
  • help us design or improve our products and services;
  • understand your financial needs;
  • save you time when you apply for new products and services; offer you quality products and services; and comply with certain laws and regulations;

We collect information – We collect and maintain your personal information so that we can provide investment management and other services to you. The types and categories of information that we collect and maintain about you include:

  • Information we receive from you to open an account or provide investment advice or other services to you (such as your home address, social security number, telephone, financial information and investment objectives).
  • Information that we generate to service your account or from our transactions with you (such as account statements and other financial information).
  • Information on your transactions with nonaffiliated third parties.

We have established procedures so that the financial information we collect is accurate, current and complete. We are committed to work with you to promptly correct any inaccurate information.

Our selective sharing of information – In order for us to provide investment management and other services to you, we do disclose your personal information in very limited instances, which include:

  • Disclosures to nonaffiliated companies as permitted by law, including those who help us service your account (such as providing account information to brokers and custodians).
  • Other limited disclosures as permitted by law, for example, required reports to government entities.

We do not share your information with third parties for marketing purposes. We do not sell your information.

Former clients – If you end your relationship with us, we will continue to adhere to the privacy policies and practices described in this notice.

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USA PATRIOT Act

Important Information About Procedures For Opening A New Account

To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify and record information that identifies each person who opens an account.

What this means for you: When you open an account, we will ask for your name, address, date of birth and other information that will allow us to identify you. We may also ask to see your driver’s license or other identifying documents.

We apologize for any inconvenience this may cause; however, federal law prohibits us from waiving these requirements.

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