The White House organized a forum with the U.S. Department of Labor in late February to announce two new rules that it believes can “enhance retirement security and transparency for the millions of workers covered by 401(k), pension and other retirement arrangements,” according to a Labor Department press release.
“These rules will strengthen America’s private retirement system by ensuring workers get good, objective information,” said U.S. Deputy Secretary of Labor Seth Harris in a statement.
The first of the two sets of rules proposes to “ensure workers receive unbiased advice about how to invest in their individual retirement accounts or 401(k) plans,” according to the Labor Department. It requires investment advisors to disclose their fees, and computer models used to offer advice must be certified as objective and unbiased.
The department estimates that some 2 million workers and 13 million IRA holders should benefit from this rule to the tune of $6 billion.
How does the industry feel about the new rules affecting investment advice? Industry organizations have varied views.
“ICI has long supported making investment advice more broadly available to 401(k) investors by allowing them to obtain advice from providers that they are familiar with, subject to strict fiduciary and disclosure conditions,” a spokesperson for the Investment Company Institute said in a statement. “We are pleased that the DOL has moved this important issue forward and we will file a detailed comment with the agency.”
The Securities Industry and Financial Markets Association, however, was far more critical. “We are disappointed the Department of Labor decided to move in this direction after having withdrawn the previous final regulations and class exemption,” said Elizabeth Varley, managing director, government affairs, in a prepared statement.