The U.S. Department of Labor finalized a rule Friday that will allow employees in 401(k) type plans and individual retirement accounts (IRAs) more accessibility to investment advice from employer-sponsored financial services firms.
“Access to professional investment advice is particularly important now for workers as they manage their 401(k) plans and IRAs in changing and volatile financial markets,” said Secretary of Labor Elaine L. Chao in a statement.
The rule includes a regulation that implements the new statutory exemption for investment advice added to the Employee Retirement Income Security Act (ERISA) by the Pension Protection Act (PPA) and a related class exemption. One of the ways investment advice may be given through the new exemption, according to the U.S. Labor Department, is through the use of a computer model certified as unbiased. The other way is through an advisor compensated on a “level-fee” basis. Several other requirements also must be satisfied, including disclosure of fees the advisor is to receive. Fee-leveling will be implemented to remove incentives for biased investment consulting.