The U.S. Department of Labor’s new rule allowing employees in 401(k) type plans and individual retirement accounts (IRAs) more accessibility to investment advice from employer-sponsored financial services firms faces both optimism and skepticism from financial advisors and lawmakers, who now pose questions pertaining to fairness for competing firms and conflicts of interest.
According to lawmakers and critics: “While many others agree that 401(k) participants need advice now more than ever, it has to be the right kind of advice from the right kind of advisers,” writes Robert Powell for today’s MarketWatch. “The final regulations ‘may undermine retirement savings plans of millions of Americans,’ House Education and Labor Committee Chairman George Miller, D-Calif., said. ‘It will allow financial services firms to offer potentially conflicted investment advice on workers’ retirement accounts. And Chad Griffeth, co-founder of Michigan-based investment advisory firm Actium, said: ‘The rule does not prevent potential for conflicted advice.’”
Some say the law already sits in limbo for two reasons, writes Powell: White House Chief of Staff Rahm Emanuel signed an executive order that put a temporary moratorium on new federal rules and mutual fund and brokerage firms are not yet ready to provide advice as mandated by the new rule.