How Financial Advisors Can Use the New 401(k) Advice Rules to Their Competitive Advantage


Years ago, the term retirement plan financial advisor was a vague term and really didn’t mean that the advisor had any retirement plan knowledge. The term could have fit the broker who had a just a handful of retirement clients, who rarely saw or serviced the clients, and got an extra trail of basis points for recommending a specific platform or set of investments. While this practice felt short of what a retirement plan advisor was supposed to do, it was tolerated as long as the stock market was booming. Thanks to a lost decade for investing and the retirement crisis that a flat stock market has created, the Department of Labor (DOL) has tried to change the role of retirement plan advisors and make sure that they fulfill a role to help 401(k) plan participants and help limit a plan sponsor’s liability in the fiduciary process of selecting plan investments.

This is why the DOL has asked on plan audits for the investment policy statement (IPS) that too many plans don’t have and why they have tried to change the definition of fiduciary to make sure that all financial advisors who work on retirement plans have the same duty of care to the plan they work on. This is also why the DOL has recently implemented regulations that created an exemption on 401(k) advice so that plan providers could offer it without creating a prohibited transaction.

LOADING PDF: If there are any problems, click here to download the file.

Written by:

Published In:


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Ary Rosenbaum, The Rosenbaum Law Firm P.C. | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »

All the intelligence you need, in one easy email:

Great! Your first step to building an email digest of JD Supra authors and topics. Log in with LinkedIn so we can start sending your digest...

Sign up for your custom alerts now, using LinkedIn ›

* With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name.