A new law established by the Department of Labor allows plan providers to offer enrollees advice regarding their 401(k) and retirement account plans.
The law, which goes into effect Dec. 27th, is designed to give investors access to the advice they need, while still ensuring that the counsel they receive from advisors remains objective and in their best interests.
Previously, regulations prohibited advisors from offering advice that might be financially rewarding for plan providers, who often also offer mutual funds and other investment vehicles.
The new regulation provides an exemption that will permit 401(k) plan providers to offer advice if it is based on an unbiased computer model or the adviser’s compensation is not affected by the investment recommendations. The advice arrangement must be audited annually to ensure it complies with the regulations.