IRS Finalizes ABLE Account Regulations: Here’s What to Know


The IRS recently published final regulations for Achieving a Better Life Experience, or ABLE, accounts for disabled Americans. ABLE accounts aim to help people with disabilities and their families save and pay for disability-related expenses. Even though the contributions aren’t deductible, distributions such as earnings are tax-free to the designated beneficiary if they’re used to pay for qualified disability expenses. These expenses can include housing, education, transportation, health, prevention and wellness, employment training and support, assistive technology and personal support services, along with other disability-related expenses.

The regulations come in response to and finalize two previously issued proposed regulations from the IRS. The first proposed regulation was published in 2015 after enactment of the ABLE Act under the Obama administration. The second proposed regulation was published in 2019 in response to the Tax Cuts and Jobs Act, which made some major changes to ABLE. 

Eligible individuals can now put more money into their ABLE account and roll money from their qualified tuition programs (529 plans) into their ABLE accounts. In addition, some contributions made to ABLE accounts by low- and moderate-income workers can now qualify for the Saver’s Credit.

The new regulations also offer guidance on the gift and generation-skipping transfer tax consequences of contributions to an ABLE account, as well as on the federal income, gift, and estate tax consequences of distributions from, and changes in the designated beneficiary of, an ABLE account.

In addition, before Jan. 1, 2026, funds can be rolled over from a designated beneficiary’s section 529 plan to an ABLE account for the same beneficiary or a family member. The regulations provide that rollovers from 529 plans, along with any contributions made to the designated beneficiary’s ABLE account (other than certain permitted contributions of the designated beneficiary’s compensation) can’t exceed the annual ABLE contribution limit.

Lastly, the final regulations offer guidance on the record-keeping and reporting requirements of a qualified ABLE program. A qualified ABLE program must maintain records that enable the program to account to the Secretary with respect to all contributions, distributions, returns of excess contributions or additional accounts, income earned, and account balances for any designated beneficiary’s ABLE account. In addition, a qualified ABLE program must report to the Secretary the establishment of each ABLE account, including the name, address, and TIN of the designated beneficiary, information regarding the disability certification or other basis for eligibility of the designated beneficiary, and other relevant information regarding each account. 

For more information about ABLE accounts or if you have any questions regarding these regulatory changes, please contact us at or check out our other relevant blogs

Top 6 Tax Tips To Know


2020 has certainly been an eventful year so far and one that will be remembered for decades to come. Despite the negative impacts of the coronavirus globally, in the world of tax and retirement planning, 2020 has brought opportunities that should be taken advantage of before year’s end. Here are some tax planning ideas to consider before 2020 comes to a close.  


As 2020 winds down, this is the optimum time to project the tax cost of a Roth conversion because most people by this time will have a reliable estimate of their 2020 income and this year’s tax benefits may be the highest ever because of historically low tax rates and possibly lower income due to the pandemic.

Once funds are converted, today’s low tax rates are locked in, plus the funds in the Roth grow income tax free forever and Roth IRAs have no lifetime required minimum distributions (RMDs). Any IRA funds converted will lower these tax-deferred IRA balances and in turn lower the amount of future RMDs that could be exposed to higher taxes.

Some may think they will be in a lower tax bracket in retirement, but that doesn’t often happen, especially after a spouse dies and the surviving spouse sees their tax bills increase when they begin to file as single.

The bottom line here is that a Roth conversion removes the risk and uncertainty of what future higher tax rates can do to your retirement income. Though Roth conversions will still be available in the future, you should still consider doing them in 2020.


In 2020, you aren’t even required to take money from your IRA distributions. The Coronavirus Aid, Relief, and Economic Security Act waived required minimum distributions for the year. But even though they aren’t required, you should look into making voluntary IRA distributions anyway because those taking money out of these tax-deferred vehicles in 2020 might be able to do so at lower tax rates.

Since the required minimum distributions are waived for 2020, this presents a one-time opportunity for those subject to the minimums to convert RMDs instead to Roth IRAs (something you can’t normally do). 

Even if you aren’t subject to required minimum distributions, it might pay for you to begin taking taxable distributions to get into the lower tax brackets and begin reducing the future IRA debt that’s building for Uncle Sam. The funds could be used either to convert to Roth IRAs or for gifting or estate planning. For example, the IRA funds withdrawn can be used to purchase permanent cash value life insurance, which after the SECURE Act will prove to be a better estate planning vehicle than inherited IRAs. Like Roth IRAs, life insurance will grow tax free and the eventual proceeds to beneficiaries will be tax free as well which is a good use of IRA funds now. IRA or plan withdrawals taken this year can also be used for gifting to family members.


Qualified charitable distributions are the most tax-efficient way to make charitable gifts because they reduce taxable IRA balances at no tax cost. The name refers to a direct transfer of IRA funds to a qualifying charity.

The only downside here is that the QCD is only available to IRA owners and beneficiaries age 70½ or older. The distribution is not available from company plans and not permitted to go to donor-advised funds or private foundations. Qualified charitable distributions are limited to $100,000 per year for each IRA owner, not per IRA account. 

Although the SECURE Act raised the required minimum distribution age to 72, the QCD age remains at 70½. This gap means the charitable distributions can begin before RMDs kick in. Even though RMDs were waived for 2020, you can still make these QCDs nonetheless since the charitable distribution still allows you to remove IRA funds at a zero tax cost. If you are giving to charity anyway, and qualify for QCDs, then this is the way you should be doing your giving.

With qualified charitable distributions,  you receive both the standard deduction and the tax benefit in the form of an exclusion from income. An exclusion is better than a tax deduction because it reduces your adjusted gross income, a key figure on the tax return. QCDs are the most tax-efficient way to reduce taxable IRA balances, because they reduce the balances to a zero tax cost.

In addition, there is a provision in the CARES Act that allows for a $300 additional charitable gifting exclusion from income for non-itemizers (for cash gifts).


With the exploding deficits and expanding national debt, there is a new urgency for clients to make gifts now, before year’s end, because it may not be an option much longer. Gifts are lifetime transfers as opposed to inheritances received after death.

The 2020 estate and gift tax exemption is $11,580,000 per person ($23,160,000 for a married couple). These figures are scheduled to go back to $5 million and $10 million, respectively, after 2025 (there will also be inflation increases). It pays to use them now or possibly lose them later. These limits apply to lifetime gifts as well as inheritances.

For those who will be subject to a federal estate tax, gifting is less expensive because gifts are tax-exclusive, as opposed to inheritances, which are tax-inclusive. If the funds are left in the estate, the full value of the transfer at death is subject to the estate tax, so the funds used to pay the estate tax are taxed themselves, whereas gift taxes on lifetime transfers are only based on the gift amount received.

There are three tiers of tax-exempt gifting:

  1. The first is $15,000 annual exclusion gifts. These gifts can be made to anyone each year and they do not reduce the gift/estate exemption. These annual exclusion gifts are always tax free—even if the exemption is used up.
  2. Unlimited gifts for direct payments for tuition and medical expenses. These gifts can be made for anyone, the amounts are unlimited, and they do not reduce the gift/estate exemption. These gifts are also always tax free—even if the exemption is used up.
  3. The $11,580,000 lifetime gift/estate exemption in 2020. The IRS has stated that there will be no clawback if these exemptions are used now, even if the exemption is later reduced, so you must use it or possibly lose it.

Gifts made now in 2020 lock in today’s gifting limits. There is no guarantee that these limits will hold up in the future.


The SECURE Act eliminated the stretch IRA for most non-spouse beneficiaries. This is effective beginning with deaths in 2020, so it is imperative to check your IRA and company plan beneficiary forms to reveal what may be the largest single asset in your estate plan.

Most non-spouse beneficiaries will be subject to the new 10-year payout rule, meaning that the entire inherited IRA will have to be withdrawn by the end of the 10th year after the IRA holder dies.

This includes most trusts named as IRA beneficiaries, and you might need to make changes; for example, most conduit trusts will not work as originally planned since the entire inherited IRA will be left unprotected in trust after the 10 years. Many of these trusts will have to be upgraded to discretionary trusts to maintain the trust protection beyond the 10 years. But even then, the inherited IRA funds will still be taxed when that decade has passed, and that tax will be at high trust tax rates for any funds remaining in the trust and not distributed to the trust beneficiaries.

One solution here is to convert these IRAs to Roths to eliminate the post-death trust tax exposure or withdraw IRA funds now and purchase life insurance, which is a better and more flexible asset to leave to a trust.

You should review any IRA estate plans, which begins with a beneficiary form review. Check to make sure that contingent beneficiaries are named and up to date. Make sure that the estate plans will still accomplish your goals after the changes brought about by the SECURE Act.


The federal income tax is a pay-as-you-go tax. Taxpayers pay the tax as they earn or receive income during the year. Taxpayers can avoid a surprise at tax time by checking their withholding amount. The IRS urges everyone to do a Paycheck Checkup in 2020, even if they did one in 2019. This includes anyone who receives a pension or annuity. 

The best way to make sure you are withholding the right amount is to use the Tax Withholding Estimator on The Tax Withholding Estimator works for most employees by helping them determine whether they need to give their employer a new Form W-4. They can use their results from the estimator to help fill out the form and adjust their income tax withholding. If they receive pension income, they can use the results from the estimator to complete a Form W-4P, Withholding Certificate for Pension and Annuity Payments PDF. To change their tax withholding, employees can use the results from the Tax Withholding Estimator to determine if they should complete a new Form W-4 and submit to their employer. Don’t file with the IRS.

These 2020 year-end retirement, tax and estate planning moves will enhance your retirement savings that will soon be exposed to potential tax increases after 2020. Given the current state of our economy, it is best for you to consider these options now, since it’s likely many of these things will be changing in the near future. These tips have been prepared for informational purposes only and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction. Check out our website for more information! 

What to Do If You Don’t Have a 401(k)

Piggybank on wooden table with stacks of coins beside it. A hand putting a coin into the piggy bank.

As the coronavirus sweeps the world and people take a step back to look at their finances for the long term, we are seeing that about half of workers don’t have access to a retirement plan at work.  That means that even as 50% of workers can take advantage of automatic payroll deductions and contribute $19,500 or more to a tax-advantaged company retirement plan, about the same percentage is on the outside looking in.

Some of these people may work for companies that offer plans, but are not eligible to contribute because they either don’t meet the criteria or they are part-time employees. Some may be self-employed, which leads to other retirement savings options and others may simply work for a firm that doesn’t offer a plan at all.

So, as people start putting a tighter rein on their finances during this economic recession, it’s important to discuss retirement saving options for those who do not have access to one through their company.  Below we will share several options for people in this situation according to an article by MorningStar.

1) Invest in an IRA.

A good first stop for any worker who has earned income is to simply fund an IRA to the maximum–$6,000 for investors under age 50 and $7,000 for those over 50. Such accounts are very easy to set up, and the money can be invested in a huge array of options. Contributing to an IRA can provide a terrific building block for retirement security. A person assiduously investing $6,000 a year in an IRA for 40 years who enjoyed 6% growth on her money would have a little over $920,000 at the end of the period.

2) Assess whether self-employment accounts are an option.

For people who are self-employed, there are a host of options for tax-advantaged retirement savings. Some of them are quite similar to what 401(k) investors have, except that there can be setup costs and oversight responsibilities. An investment in a conventional IRA, an individual 401(k), a SEP or SIMPLE IRA’s are all good investment ideas.

3) Assess whether an HSA is an option.

While by no means a first line of defense for people without a 401(k), a health savings account is a decent ancillary retirement account option for people covered by a high-deductible healthcare plan.

4) Invest in a tax-efficient way in a taxable brokerage account.

While it’s ideal to invest in vehicles that provide some type of a tax benefit, people without a company retirement plan can also invest tax-efficiently inside of a taxable account. The key is to select investments that incur few taxes on an ongoing basis.

5) Be part of the solution.

Finally, if you work for a small employer that lacks a company retirement plan, consider offering to assist your employer in figuring out how to get one off the ground. Setting up such a plan has gotten cheaper and less complicated in recent years, and your employer may welcome a financially savvy partner to help with some of the research and vetting.

As always, if you have any questions about your current 401(k) or need help investing money in order to supplement a lack of one, please reach out to us and we would be happy to discuss your future financial goals.  

The Biggest Money Mistakes People Make in a Recession


During an economic recession, it’s easy to make mistakes when it comes to your finances and managing your money. Many people are facing decisions and situations that they have never had to deal with before. They need help navigating this new territory and recognizing their mistakes. We read a Wall Street Journal article discussing the biggest money mistakes people tend to make during an economic downturn and we want to bring light to a few of them and talk about ways to avoid them.

As you’ll see, the mistakes cover a wide array of practices and situations and not everyone has the luxury of making some of these mistakes. Hopefully, being aware of these errors will make you think as you find your path through the coming months. And ideally, avoiding any of these mistakes will make your economic troubles a little less painful and the eventual recovery a little more robust.

Refusing to Tap the Emergency Fund

Some people experiencing economic hardship choose to live uncomfortably rather than access their savings. This happens when their saver’s mentality—the same one that helped in building an emergency fund—makes the emergency fund seem sacred and unavailable for use. A better framework for thinking about the use of such funds is viewing it as a reward for disciplined saving in good times. Isn’t this why you had the emergency fund in the first place?

No Re-Entry Plan

Investors often sell out of equities during a downturn without a plan of when to buy back in. It’s impossible to tell when exactly the markets are going to recover—witness the rapid bull market since late March—but you need a plan. While everyone’s situation is different, a phased approach could be the way to go, slowly moving back into equities.

Ignoring Your Credit Score

One mistake we make during a downturn is not paying enough attention to our credit score. But this is what affects the interest rate we get on our mortgage and credit cards, as well as whether we’ll be able to get insurance or even rent an apartment. So it is important, even during difficult times, to try to pay bills on time, not max out on credit cards, not open several new credit accounts in a short period of time, and keep a good financial history as much as possible.

No Retirement Funding

During an economic downturn, people often get scared and halt contributions to their 401(k) and/or individual retirement accounts. It’s still important to maintain your pace on contributions and to not jump the gun on withdrawals. You should continue to look at the big picture and avoid taking a loan from your retirement. People often miss the opportunity of buying low and accumulating more shares – a recession is actually a great time to actively look for bargains in the market. Make sure to keep your risk capacity in sight and gauge your cash needs wisely in times like these.

Not Talking About Money

With the pandemic forcing millions of people world-wide into financial distress, a natural response may be to avoid conversations about money at all costs. However, our research suggests that discussing money with your partner in hard times can help your relationship and finances if you approach these discussions the right way.

As mentioned above, an economic recession is the perfect opportunity to take a step back and discuss and organize your finances. Saving for the future, talking to someone about your investments, and organizing your portfolio are all smart moves when setting yourself up for financial success and the ability to navigate an economic recession. If you have any questions or want to talk about your personal finances, please reach out to us at To read some of our other blogs, check it out here

Top 5 Pieces of Financial Advice

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As we are all adjusting to the new norm that the coronavirus pandemic has created in our world, we are also learning pieces of advice that we could share from this experience. When going through an economic crisis, it’s important to keep some tips at top-of-mind to help you navigate the bumpy waters. In a CNBC Select Article, we found 5 great pieces of financial advice that we want to share with you to put in your financial repertoire.

First and foremost, try not to accumulate credit card debt. Racking up credit card debt can have very negative long term consequences, so it’s important that you pay the full balance on time. When you do not pay the full balance on time, your card will quickly accumulate interest, which often can get so high that it’s hard to pay off. 

According to recent Federal Reserve data released in September, the average interest rate for all credit card accounts is 14.87%. Among accounts assessed interest, or accounts with outstanding finance charges, the average interest rate rises to 16.88%. But for consumers with credit scores below 670, interest rates can near 30%, CNBC Select reports.

Next, make sure you don’t buy things you can’t afford. Although this one seems obvious, it’s much more common than you think. Avoid overspending and spending on things you can live without. Start putting that extra money into savings accounts where you can be accruing interest and earning money. 

Third, invest the year’s expenses or anything saved after you have the year’s expenses saved? Before the pandemic, many people were saying how you should have several months of rent and expenses in a savings account for a rainy day, but as we have seen the economic hardships the coronavirus has inflicted upon our society, we are suggesting to save about a year’s worth of expenses before investing it elsewhere. 

Fourth, start to think like a savvy businessman or woman. Learn to negotiate. Especially in the world we are living in today, make sure you are constantly looking for deals and inquiring about credit card versus cash options. Oftentimes, places will charge you less if you pay in cash. So, before swiping that card, make sure you think about all your options. 

Lastly, buy in bulk. With Amazon becoming increasingly popular and making it possible to get what you need in a matter of hours, take advantage of deals and places you can buy in bulk. If you can save a few dollars here and there, take advantage of it. It’s important to be a smart shopper, especially when buying something pricey, such as groceries for a large family. 

By implementing some of these basic money management tips into your daily routine, you will find yourself becoming a more savvy shopper and saving more money. It is especially important during an economic recession to take these concepts into consideration and make the most of your finances. If you have any questions on other ways you can maximize your financial portfolio and find places in your budget where you can save money, please reach out to us at or visit our site at Check out our other blog posts for more financial advice and tips! 


Paying Hidden Costs Because your Broker’s not a Fiduciary?

Age based(1)

Investors often choose big banks and investment firms over smaller financial advisors because they think the brand name and size makes the service and product offerings better. In actuality, it’s often the reverse.

Unless your firm is a Fiduciary, chances are there are sales quotas and contests for the non fiduciary, “suitability” reps, who are often paid extra to put clients in proprietary funds that are not in the clients’ best interests, but that reap commissions for the brokerage house.

Last Friday the SEC issued a statement announcing that three investment advisers “have settled charges for breaching fiduciary duties to clients and generating millions of dollars of improper fees in the process.” The release goes on to say that “PNC Investments LLC, Securities America Advisors Inc., and Geneos Wealth Management Inc. failed to disclose conflicts of interest and violated their duty to seek best execution by investing advisory clients in higher-cost mutual fund shares when lower-cost shares of the same funds were available.”

And according to an article in Investment News last week, it turns out smaller credit card and savings customers may not have been the only ones who were misled in the Wells Fargo “fake account” scandal. The article states that “according to inside sources, some clients of the bank’s wealth-management division were steered into investments that maximized revenue for the bank and compensation for its employees.”

When will this stop and why would any one continue to do business with one of these non Fiduciary firms?

The big problem is lack of transparency. Most investors don’t understand how the business works and how broker-dealers make their money. That means the investors are, in effect, investing blindfolded. And while there are many good, principled people at the larger firms, because they are not bound by the Fiduciary Standard, there is lots of potential for recommending something that is “almost as good” as the best product for you.

The result is that, according to a survey just released by the CFA Institute, a majority of investors believe that their advisors fail to fully disclose conflicts of interest and the fees they charge. Only 35% of individual investors polled believe that their advisor always puts their clients’ interests ahead of their own and only 25% of the institutional investors who participated in the survey.

April is National Financial Literacy month and one of the most important Financial Lessons investors – and potential investors – can learn this month is what “Fiduciary” means and why it’s so critical to your financial health.

When you’re working with a fee-only Fiduciary, they have sworn to only recommend financial products that are the best for their clients. Most broker-dealers in large wire houses have only agreed to uphold the “suitability” standard, which means they are allowed to recommend investments that are “suitable” – not best – for you but potentially yield a markup for their company or bonus or commission for them.

If you’re unclear about what fees you are paying, share classes you own, or how much your funds are costing you in annual expenses, contact us for a free analysis of your currents investments and the costs associated with them.

Particularly during Financial Literacy Month, make sure your Financial Advisor is working for you.


The Imperfect Fiduciary Rule just got Worse

Half-full glasses

Last Thursday, the U.S. Court of Appeals for the Fifth Circuit struck down the Department of Labor’s Fiduciary Rule, stating that it was “unreasonable’ that brokers handling investors’ retirement savings should be required to only act in clients’ best interest.

Unreasonable for advisors to only act in their clients’ best interests? Let that sink in for a moment…

In a nutshell: it’s still considered acceptable in the financial industry for advisors to give clients advice that is less than the best for the clients when it yields a higher commission for the broker.

In case you were wondering, the plaintiffs challenging the DOL’s Fiduciary Rule were the U.S. Chamber of Commerce, the Securities Industry and Financial Markets Association, the Financial Services Institute, Financial Services Roundtable, and Insured Retirement Institute. None of whom, clearly, are friends to the individual investor.

Because different Courts’ decisions have not been consistent about this Obama Administration effort to protect individual advisors, there is speculation the question will climb at some point to the Supreme Court, so this isn’t over. And while the Fiduciary Rule was not perfect, this is clearly worse.

Meanwhile, what can you as an individual investor do to make sure your interests are not being sacrificed for the benefit of your advisor? Very simple: make sure your advisor is ALREADY a Fiduciary. And if they’re not, switch. Why leave your money in a big brokerage house where conflicts of interest and commissions potentially eat into your gains and your future? Or where – instead of being given the full picture – you’re being steered toward a product that isn’t the best possible choice for you because of brokers’ sales goals or “contests”?

Individual investors have the power to tell the industry that this is unacceptable by voting with their feet (or computers.) Choose an advisor who has sworn to uphold the Fiduciary Standard and ONLY recommend choices that are in your best interest.

Just because the 5th Circuit is willing to settle for less doesn’t mean you should.



If you’re concerned you’re not getting the fullest picture about what’s right for you and the best, un-conflicted advice, give us a call for a free portfolio review or learn more about our fee-only, Fiduciary approach.

A True Measure of Uncompromised Advice

Uncompromised Advice

Do you remember the scene from the movie Matilda when Harry (Danny DeVito) shows his son his dodgy-car salesmanship?

While highly over exaggerated in the film for the sake of comedy, it is true that whenever you buy something from a salesman, you should ask… what’s in it for them?  It’s safe to say that a healthy amount of skepticism should probably be given to anyone trying to sell you a product.  Shouldn’t that advice translate over to the world of investment products as well?

Especially following the financial crisis, the financial services industry is considered among the lowest trusted businesses.  It makes sense.  Individuals tend have a hard-time trusting people who look at making a quick buck for a living.  While that isn’t necessarily the case, it is true that there is a conflict of interest that often exists for many advisors (at wirehouses, independent broker/dealers, and insurance backed firms) who have an obligation to provide a standard of care for their client, but also have a sense of duty to their firms.  Their compensation structure (having sales targets and commission based compensation packages) fundamentally misaligns the interests of both parties. That strikes us as a conflict that is unmanageable and ultimately, comes at the cost of the client.

In the fallout of the financial crisis, regulators have tried to step in over the last decade to ensure that the world of retirement advice acts without conflicts of interest, specifically by holding all financial advisors to a status of “fiduciary.”  It means that these advisors who have potential conflicts of interest will have to increase their disclosures and explain what they do for clients as it relates to advice on retirement assets.  These advisors are upset!  While they might not admit it, they are concerned that this new rule will affect their income.  The increased pressure these advisors are putting on the administration has resulted in the Labor Department seeking an 18-month delay in its implementation.  While the rule is designed to protect the retirement savings of clients, the pushback could ultimately cause the rule to never get implemented.

So again, where do you as a client fall in this equation?  Just how valuable is your “trusted” relationship?

That is where we come in.  At Sherman Wealth Management, we have always been a fee-only fiduciary.  That means while competitors are off arguing about fees, disclosures and conflicts of interest, we already subscribe to the status of “fiduciary” and will remain unaffected by the changes.  We provide uncompromised advice and our compensation is not based on commissions or any salesmanship of a product.  The only thing we are “selling” is our best customized advice for your unique financial situation.  We believe that working with an advisor who is already committed to functioning in your best interest will give you peace of mind about your retirement savings.

Feel free to reach out to us anytime with questions or comments.  Unlike Matilda’s Mrs. Trunchbull, you won’t have to hunt us down.



The views expressed in this blog post are as of the date of the posting, and are subject to change based on market and other conditions. This blog contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.
Please note that nothing in this blog post should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax or legal advice. If you would like investment, accounting, tax or legal advice, you should consult with your own financial advisors, accountants, or attorneys regarding your individual circumstances and needs. No advice may be rendered by Sherman Wealth unless a client service agreement is in place.

Are You Getting Your Money’s Worth in Financial Advice?

Measuring value

Recent news about a new fiduciary rule has left many folks more confused than ever about fee structures, and concerned about whether they’re getting the best value from their financial advisor’s fees or their brokerage firm’s fee structure. According to a recent podcast from the Wall Street Journal, it’s not only how much you pay – but also what you are paying for – that’s a source of communication breakdown between those clients and their advisors.

While the Department of Labor is pushing to get advisors and brokers to make it easier for clients to understand their fee structures, so far it doesn’t look like many of the bigger firms are taking them up on it.

Since any firm or advisor can claim to be client-driven, transparent, and “fee-based,” how can you be completely sure about what you’re getting and how much you’re paying? If your advisor is fee-based, rather than strictly fee-only, they may be earning commissions when they recommend certain investment products. Obviously, that creates a potential conflict of interest: those advisors have incentives to trade more frequently, and to recommend specific products in order to generate higher commissions for themselves and their firm, whether or not they’re best for you.

One way to avoid uncertainty – and the potential headaches it brings – is to work with a fee-only registered investment advisory firm (RIA). Fee-only RIAs and advisors do not earn commissions so they are not motivated by the frequency of trades, so they are less likely to encourage buying and selling unless it’s the best choice for you. Because RIAs are held to a fiduciary standard, they are legally bound to always – and only – act in your best interest.

Do your advisor’s feed include additional services?

Even if you are working with a fee-only RIA, however, you may be still not getting your full money’s worth. Many clients neglect to take advantage of untapped services that are included in their advisor’s fees, such as tax and estate planning, insurance advice, and financial coaching, among other services. If you’re not sure what additional services your advisor – or the advisors you are considering – provide, ask them. It’s the best way to ensure that there’s an open path of communication and that you are getting the most value out of your wealth management experience.

Only you can decide what kind of fee structure is best for you, what you feel is the appropriate amount to spend on investment management and financial planning, and what additional services are important to you to help you grow your wealth.

If you’re concerned you’re not getting your money’s worth, though, or that you’re paying too much, here are some good questions to ask yourself: How adequately served do you think you are? Are you confused with what services you are getting and what you are paying for? Do you feel valued? Are your goals being met and are you being listened to?

If you’re not satisfied with the answers to any of these questions, remember that you have options. Sherman Wealth Management is proud to be a fee-only independent RIA firm, because we feel it is the best way to meet our ethical standards and guarantee that all potential clients have a simple and cost-effective way to access investment management and financial planning.

Knowing what those options are, and getting clarity in your fee structures – whatever kind of advisor you ultimately choose – will allow you to feel more confident about the decisions you make, now and for your future.

This article was originally published on


The views expressed in this blog post are as of the date of the posting, and are subject to change based on market and other conditions. This blog contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.
Please note that nothing in this blog post should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax or legal advice. If you would like investment, accounting, tax or legal advice, you should consult with your own financial advisors, accountants, or attorneys regarding your individual circumstances and needs. No advice may be rendered by Sherman Wealth unless a client service agreement is in place.










Do Potential Changes to the Fiduciary Rule Mean Trouble for You?

Trust in your Fiduciary

A year ago the Department of Labor expanded the number of financial advisors required to adhere to the fiduciary standard for retirement asset and accounts. This was clearly good news for investors. Adoption has now been delayed, however, and the future of this consumer protection is not clear.

Fiduciary means “Trust”

The word “Fiduciary” (from a the Latin word for “something inspiring trust”) describes a category of registered independent investment advisors who – like Sherman Wealth – are required to act solely and exclusively in the best interest of their clients. Our decisions are not colored by any expectation of additional income from the products we recommend.

Don’t all advisors work in their clients best interests?

Not necessarily. While it seems obvious that giving you the best advice is what you expect your advisor to do – it’s what you pay them for after all – broker-dealers are not required to operate as fiduciaries.

Broker-dealers have only been required to recommend products that are deemed a “suitable” choice for a client, not necessarily the best choice. Broker dealers can therefore recommend investments they receive commissions for selling or that their firm has an interest in, whether or not they are the best choice for you.

Let’s put it this way: as long as their recommendations are in the ballpark, they don’t have to aim for hitting it out of the park for you.

The new fiduciary rule should be a win-win, right?

Again, not necessarily. The new rule, which was passed under the previous administration, was set to go into effect this week and would have required the widespread adoption of the fiduciary rule for investment accounts and assets.

That would have given investors greater protection and greater confidence in the advice they are getting from their advisors.

The DOL has delayed the date of adoption until June 9, however, as the result of an executive order by the new administration. The current administration says it needs time to examine and review it, given, among other things, the Financial Industry’s concerns about costs to them, including the money they are earning on commissions from clients like you.

How does this affect your Financial Future?

If you are already working with a fiduciary, not at all. You are already covered, for all aspects of your investments, not just retirement funds.

If you are not already with a fiduciary advisor, even if the new rule is adopted in some form or another, it only applies to retirement investments and potentially not the full spectrum of your investing strategy, so you are still not getting the most transparent, trustworthy advice you can.

What should you do to insure you’re getting conflict-free advice?

Find out if your investor is a fee-only Fiduciary. Ask them. They are required to tell you. And don’t be fooled by “fee-based.” A true fiduciary does not take commissions and is conflict-of-interest free.

Hopefully the DOL will act in the best interest of consumers and investors. Even if the future of the new ruling is unclear, you can protect yourself by working with one of the many advisories that has – like Sherman Wealth – already adopted the Fiduciary Standard for all investment categories.

At Sherman Wealth we are proud to operate as fee-only fiduciaries, which means that our decisions are based on your goals, your risk tolerance, and your plan. Nothing more and nothing less. We couldn’t imagine bringing anything but our best advice to our clients’ financial futures.


The views expressed in this blog post are as of the date of the posting, and are subject to change based on market and other conditions. This blog contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.
Please note that nothing in this blog post should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax or legal advice. If you would like investment, accounting, tax or legal advice, you should consult with your own financial advisors, accountants, or attorneys regarding your individual circumstances and needs. No advice may be rendered by Sherman Wealth unless a client service agreement is in place.
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