The Department of Labor on Friday released the second batch of frequently-asked-questions with guidance on its fiduciary rule.
In releasing the 16-page FAQ, which includes 30 questions and answers, Phyllis Borzi (seen here), assistant secretary of Labor for the Employee Benefits Security Administration, noted that the information is “meant especially for workers and retirement investors.”
EBSA was deploying the FAQs to the public early Friday afternoon through its email subscription service.
“The new consumer protections start to go into effect this April, and we want to be sure that consumers have the information they need to make use of those new protections,” Borzi wrote. She added that EBSA wants to “answer as many questions as possible about the new rules.”
Knut Rostad, president of the Institute for the Fiduciary Standard, said that the FAQ ”is an excellent first cut at boiling 1,000 pages of rule language (down) to 16 pages. It describes what it means to be a retirement advisor and where the industry just got it completely wrong again and again.”
The FAQ, he added, is “a great basis for advisors to use to go the next step and get the most key points for investors in just two or three pages.”
One question asks: Will the rule cause change in the financial services industry?
EBSA’s answer: “Yes. Although many advisors already work hard to give sound advice that puts the customer first, the new rule will generally make best interest advice the law. Also, the rule will require many financial institutions to significantly change their compensation practices. The financial services industry will not be permitted to use incentives such as quotas, bonuses or prizes that encourage advisers to make recommendations that are not in your interest.”